In February of 2009 I wrote an article titled “My Top 5 Predictions for the Future of the RV Industry”. I thought that since nearly a year has passed this would be a good time to take a look at how my predictions faired. In the original article I mentioned that the RV industry has endured many hardships in the past; recessions, high interest rates for consumer lending and dealer floor plan payments, the high cost of fuel and that it has always rebounded. To come back stronger than it was before requires innovation, change and forward thinking on the part of its leaders in all sectors of the industry.
To read my first article go here
Now let’s take a look at my past predictions and current conditions.
My #5 Prediction:
The weak will not survive. Whether it is a manufacturer, dealer, campground or aftermarket supplier only the strong who are committed, determined and willing to change with the times will survive this current downturn. It will require downsizing operations, inventory, and making good solid business decisions. Back to the basics! In the long run this will make the remaining companies better, stronger and more adaptable to change.
The list of U.S. RV manufacturers that are no longer in business or have filed bankruptcy has exceeded 20 since the recession began. As of June 2009 approximately 160 RV dealers across the country closed their doors for good. The remaining 95 or so U.S. RV manufacturers and 2,900 RV dealers have done what was necessary to stay in business through the worst of the recession. Manufacturers and dealers alike scaled back operations. Dealers lowered inventory levels resulting in fewer RV’s being manufactured, and the survivors made wise business decisions in anticipation of a turnaround.
My #4 Prediction:
RV manufacturers will need to improve on the quality of RV’s. As a society Americans are more and more demanding that the products they purchase are of the highest quality. This is especially true of major purchases. Modern technology focuses on better quality products, from cell phones and computers to automobiles and RV’s. Some RV manufacturers, not all, need to address the issue of higher quality in its product offering to remain competitive in the future RV market. The current economic crisis will help weed out some of the poor quality products.
RV dealers and RV manufacturers survive in large part on repeat business. The RV dealer strives to get the new first time RV buyers business and to become their dealer of choice. The RV manufacturer wants the first time buyer to purchase another one of its product offerings when it’s time to upgrade. This competitiveness between manufacturers, especially during a recession, results in design improvements, advanced technology and better quality RV’s being manufactured. As manufacturers compete for repeat business and consumer loyalty the quality of RV’s will continue to improve. I personally have owned five RV’s, and four of them are from the same manufacturer, Fleetwood. The interesting thing is that if there is a sixth RV in my future it will probably have to be a manufacturer other than Fleetwood since the towable division is gone for good and the motorized division was sold and is under new management.
My #3 Prediction:
Along with better quality built in the product comes better warranty and better customer service. I have experienced RV manufacturers with outstanding warranty programs and others who barely stand behind the product it builds. The same holds true with customer service, but a large part of customer service is dependent upon the RV dealer selling the manufacturers product. The days of only servicing a customer’s unit if they bought it from me mentality are over. If RV dealers want to stay in the future RV marketplace they better show it in how they treat and service the customers who walk through the door. Think about it, if you had a bad customer service experience in the past do you return to that company to do business in the future?
When RV sales figures drop drastically RV dealers need to find ways to make up for the loss in profit if they want to stay in business. RV dealers, for the most part, consist of three different entities; the sales department, the parts department and the service department. It’s no secret that the sales department is the primary source of income for RV dealerships. The savvy RV dealer must find ways to increase the profit level in the service department when sales figures are off. That is exactly what many RV dealers did during the recession. They realized if consumers weren’t buying, or couldn’t buy RV’s, that people who already owned RV’s would have more reason to maintain their current RV. The smart RV dealer not only concentrated on taking in more service work, but on improving customer service across the board. The really smart dealer offered to work on the orphan RV’s for owners whose RV manufacturer folded during the recession. What better way to improve customer loyalty and repeat business when RV sales pick up again.
My #2 Prediction:
Borrowing money as we know it will probably never be the same again, and that is a good thing. Banks that loan money need to be more responsible. I won’t get into my take on us, the taxpayers, bailing some of these institutions and people out. Loaning more than a property is worth, loaning to consumers you know cannot afford to repay the loan, overextending borrowers and allowing consumers to be so upside down in an auto or RV loan are all poor business practices. You can see where it got us now. A reputable RV dealer builds its business on repeat business. You sell a customer their first RV, say a pop up, treat them fairly, provide good customer service and they will return to that dealership when it is time to upgrade. The average RVer will own four or more RV’s in their lifetime. A dealership cannot stay in business or remain competitive if the consumer finances way more than the RV is worth and cannot sell or trade it in the future. Criteria for lending money has already tightened and will stay that way in the foreseeable future. RV dealers who want to get their fair share of the market will need to be more responsible when it comes to making sure consumers will in fact be future repeat customers.
Banks not lending money is probably the biggest remaining hurdle for the RV industry to recover from the current recession. RV sales projections are up for 2010, RV manufacturers are hiring more employees and ramping up production and consumer confidence is improving, so, why aren’t banks loaning money to qualified RV buyers? I read somewhere recently, but can’t find it now, that prior to the recession 7 or 8 out of 10 RV loan applicants were approved. During the recession only 3 or 4 out of 10 RV loan applicants were being approved. Prior to the housing industry meltdown, subprime lending fiasco and all of the corporate greed, these lenders were too open to lending money, but now it seems they have ridiculously overcorrected the initial problem. If a consumer qualifies for an RV loan why won’t these banks lend the money? We the tax payers were forced into bailing out many of these banks. The reason for the bailout, at least the way I understood it, was to not only cover all of their bad debt and keep them from collapsing, but to get them back to lending money to qualified buyers. Somebody in the current administration needs to force the banker’s hand to start lending money to qualified buyers if we plan to boost the economy as a whole.
Whether you like it or not everything is going green. I don’t know how anybody cannot realize this, but RV manufacturers especially need to take heed. I grew up during an era of muscle cars; where horse power and speed were more important than fuel economy. But for the future of the RV industry bigger is not going to be better. RV manufacturers need to downsize! Smaller, lighter and more aerodynamic travel trailers and 5th wheels will be in demand. Not only for better fuel efficiency but quite possibly because there won’t be any vehicles manufactured that are capable of towing heavier models in the future. Motorized RV’s will be smaller in size with more fuel efficient power plants capable of burning alternative fuels or running off renewable energy. The focus will shift from models with 5 slide outs to streamlined models capable of 15 mpg or more.
This prediction is evolving as I write this article. The 2009 National RV Trade Show in Louisville, Ky. rolled out some aerodynamic, lightweight, fuel saving RVs of the future. This lets you know that there are innovative forward thinkers in this industry poised to come back strong when the economy rebounds.
RV industry veterans have lived through similar hardships in the past and witnessed tremendous growth afterwards. As difficult as it has been for the past couple of years it is quite possible that this will be a factor in the RV industry being even stronger in the future. It is my prediction that 2010 will be the turning point to renewed growth and prosperity for the RV industry.