We know better days are ahead for the RV business, not only because that’s what the industry’s chief forecaster says but also because our instincts tell us that things can’t get much worse.
Of the six largest publicly traded motorhome manufacturers in 2006, only Thor Industries and Winnebago Industries have survived intact. National RV Holdings of Perris, California, folded in November of 2007; Coachmen Industries of Elkhart, Indiana, sold its RV business to Forest River at the end of 2008, and Monaco Coach Corporation of Coburg, Oregon, and Fleetwood Enterprises of Riverside, California, both went into bankruptcy this year.
Winnebago, the nation’s largest motorhome builder, and Thor, which builds both trailers and motorhomes and is the world’s largest RV company, have lost some money, but have had the financial strength to weather the downturn in RV sales.
Other motorhome builders were not so lucky. Go to the former website of National RV these days and you will be met with the news that the company is defunct and an invitation to go to the Monaco Coach Corporation website to check out its products. When you go to the Monaco Coach Corporation website, you learn that it, too, is out of the motorhome business and you are directed to its successor’s site.
The Monaco name has survived as part of a new company, Monaco RV LLC, owned by Navistar International Corporation. Navistar picked up Monaco’s RV assets in bankruptcy for $47 million with plans to add RVs to its product lineup that includes trucks, buses, diesel engines and the Workhorse chassis.
Although the future of Fleetwood motorhomes was uncertain at press time, it appeared that someone would buy that business out of bankruptcy too.
Reason for Optimism
While the recession has battered companies and destroyed jobs in RV manufacturing centers in Indiana and Oregon, the RV industry will not only survive but may well thrive as fewer manufacturers compete for sales. Like the automobile business, the RV business has always cycled up and down.
Dr. Richard Curtin, who is director of consumer surveys at the University of Michigan and produces industry forecasts for the Recreation Vehicle Industry Association, thinks the low point in RV sales was reached in the first quarter of this year and that gradual improvement can be expected.
To understand the depth of the decline in RV sales, just look at RVIA’s table on RV shipments for the first four months of 2009 compared with the same period in 2008. Shipments of new motorhomes fell from 15,000 to 3,400. Travel trailers, fifth wheels, folding campers and truck campers went from 99,000 to 40,300. Total RV shipments were down by more than 60 percent. In fact, shipments this year are likely to be at their lowest level since the gas and credit crunch of 1980-81.
Still, the fact remains that lots of people like the RV lifestyle and nothing has happened to diminish its appeal.
As Coon told the annual membership meeting of the RVIA in June, “The persistent appeal of the RV lifestyle as well as the good economic value provided by this form of recreation will energize future growth in the RV market, once again driving the RV market to higher levels.”
Coon estimates that RV shipments will total 169,500 units in 2010, a 24 percent increase over the 136,500 shipments predicted for 2009, but still a long way from the 390,000 units shipped in 2006.
Of course, economic forecasting is an inexact science, if it’s a science at all. Coon cautioned that 2010 shipments could be 15 percent higher or lower than his forecast because there is so much uncertainty about the future course of the economy.
“This is the longest and deepest U.S. recession of the past half century,” he said. “However, while fluctuations in sales are expected, there has been no change in the strong preferences expressed by consumers for the RV lifestyle.”
Surge in Camping
While the recession’s impact on RV builders has been devastating, it has had the odd effect of helping RV parks and campgrounds in two ways—by stopping the loss of campgrounds to development and by bringing new people into camping.
Debbie Sipe, executive director of the California Association of RV Parks and Campgrounds, said that when the economy was booming and property values were soaring in California, the state was rapidly losing campgrounds as developers bought up property to build houses and condos. When housing prices collapsed, not only did that trend end, but developers who had bought campgrounds suddenly discovered that they were in a business that was “kind of recession proof.”
In tough times, people look for ways to cut back on expenses, and forgo things like very expensive vacations, but they still want recreation.
“We’re getting a huge resurgence of interest in camping because it is affordable,” Sipe said.
Most people who start camping begin with tents because that’s the cheapest alternative. You don’t even have to buy a tent, Sipe noted. At www.lowergear.com, you can rent a tent, a sleeping bag and a lantern and they will ship the gear to your door, or even your campsite. Tents cost as little as $22 for three days.
Once people try tent camping, Sipe noted, they often move up to an RV. So maybe, in the long run, if the recession introduces more people to camping, there will finally be some benefit for the makers and sellers of RVs.
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