The puzzling decline of travel trailers
I’ll admit I’m stumped. As I reviewed the shipment report released Friday by the RV Industry Association, I was left wondering what happened to the travel trailer segment.
The March shipment data revealed that nearly every market segment was down by double digits:
- Travel trailers, down 18.7 percent
- Fifth wheels, down 14.1 percent
- Although folding campers were even in March, for the year they were down 17 percent
- Even truck camper sales were down 22.2 percent last month
In asking around, some have speculated that dealer inventory was simply too high earlier this year and that they have put off reordering new product until the 2008 models are introduced. Some companies, like Fleetwood, are already introducing their 2008 lines. But, if that’s the case, what are dealers selling until the 2008 models arrive on their lots?
In talking to dealers, they tell me that although January and part of February was slow, nearly everyone said that March was one of the best months they’ve had in a while. If so, why would shipments be down double digits in most categories?
Could it be that manufacturers got caught off guard by a sudden spring surge and they weren’t able to gear up production quickly to generate replacement units? So, although demand for units may have been high, shipments to dealers were down because units couldn’t be built fast enough.
Fuel prices have traditionally impacted motorhomes as people erroneously think that it will cost them an arm and a leg to travel a few hours to enjoy a weekend away in their motorhomes. Dealers are usually able to set consumers straight when they take time to come onto the lot, and it looks like they are succeeding. Type A motorhomes were down only 2.7 percent in March, but up 3.4 percent for the year.
A quick glance at the campgrounds surrounding the Texas Motor Speedway a few weeks ago showed just how popular RVing remains, at least with the NASCAR crowd. You could almost walk roof-to-roof for miles on all the motorhomes crammed into the parks.
The shipment decline still can’t be an adjustment due to Katrina units, can it? By March 2006 most of the FEMA trailers had been already been sold to the government. I know RVIA went to great lengths to separate the Katrina units from routine sales to prevent data from being skewed. Could it be that this downward trend in travel trailer shipments is directly due to the fact the government is selling thousands of used FEMA “RVs” to unsuspecting buyers?
Type C motorhomes were down 13.6 percent in March and for the year — and that’s also confusing. If gas prices were the issue, why were the more fuel efficient Type Cs getting hammered while demand for the larger units was increasing? Perhaps consumers were adopting the attitude of a gentleman responding to last week’s blog when he said in response to the “hostage-to-Big-Oil” game that’s being foisted on everyone, “Screw ‘em!! Fill the tank up anyway and go support your nearest campground owner and have a lovely weekend! Ya’ll honk as you go by.”
Demand for Type B motorhomes, which are very fuel efficient, is up considerably this year. Even though it amounts to only a 300 unit increase over last year, a 42.9 percent increase is hard to ignore. But, when it comes to expense of ownership/operation, what’s the difference between traveling in a Type B motorhome and hauling a travel trailer?
So, as hard as it will be for me to just shut up and listen for a while, I’m truly interested in any theories as to why travel trailers are dropping while motorhomes appear to be on the rise.
May 11th, 2007 at 5:58 am
This is puzzling given market that should still be there for travel trailers. Part of the problem may be sales reps that don’t spend as much time with a travel trailer prospect as they should because they are looking for the motorhome buyer that will spend more money and they will make more money.
However, there is strength in numbers and there is nothing wrong with selling ten trailers instead of one motorhome, except that you have to work harder and longer to accomplish the same result.
The demographics of the industry and its potential customer opportunities support the logic of increased TT sales but it doesn’t seem to be happening.
There are clear indications that the dealers that focus on this market segment and present the product in a lifestyle setting, instead of squeezed together on the lot, are still doing quite well. They are focused, have developed an intelligent sales and marketing strategy, spend a lot of time with prospects to make sure they understand the RV lifestyle and the product that will best suit their needs, represent just a few manufacturers and do it very well, and have a dealership that is inviting, educational and non-threatening to the new customers we have to create every day. These dealers do not try to be all inclusive and sell a few of everything available on the market today. We have dealers in this industry that subscribe to this marketing plan and they do quite well every year, despite the economy, the gas prices, or the impact of the Go RVing lead campaign.
They have taken responsibility for their own prospecting, lead development and follow-up, customer presentations, educating their sales teams, presenting the products in a professional manner, and have made the purchase decision an exciting moment for the new RVer and not an intimidating or brow-beating experience by a sales rep that only wants to sell a product and has no clue as to why the prospect wants to buy and use the product.
May 7th, 2007 at 5:15 pm
It would be intresting to know if used trailers are up or down. Maybe new RVers are purchasing used instead of new. I would assume that customers have less income this year and are spending less money. They still want to have fun though.
May 7th, 2007 at 4:17 pm
Greg Gerber,
UNITED RECREATIONAL VEHICLES LLC.
BUSINESS SALES PLAN
In twenty-five years the RV industry has developed into a powerhouse with or without wheels. The dealers and networks, associations, organizations and companies all are experiencing very impressive growth. Total RV shipments will exceed 384,000 for this year and the next coming one, relatively the same around 342,000 for next year. Even with declines because of fuel costs, equity line borrowing, consumers job outlooks, only smaller gains-adjusted incomes or even decreased disposable income more people in the thousands according GoRving are becoming interested ever single day.
More RVs will be shipped this coming year than ever before and this trend will not stop until the end of the decade. More than one source is reporting this. The dealers and networks of North Americas best stores operations are positioning themselves to be in the future customer’s direct sights.
The interesting parts of the RV Market are conventional travel trailers numbers are where to find the pockets of growth. Can we find vertical markets with prospective customers? The Recreation Vehicles Industry association (RVIA) data states: “The Travel Trailers market is expected to decline in 2007 due to and reflects a normal pattern of change and will then reflect strong second half of year sales.” The largest portion for the decline next year is because of size of trailers and required tow a vehicle not matching.
Small Travel Trailers are where the beginners RVers started. The University of Michigan released next years figures to support the shift and the great opportunity:
· Shipping from manufactures will increase 11.3%.
· The potential RV age group (Baby Boomers) 44-64 will reach 57 million by the end of the decade.
· That number is 11,000 people per day until the decade. That is a huge direct target market.
· Disposable incomes figures show increases are to be an estimate 3% more than last year.
· The best indicators after surveys of people still going to travel in this year in the USA is next year 16.4 million light weight cars & trucks will be sold here in the USA.
Purchasing shifts as a result of fuel and the fact that people are still doing things outdoors is driving our industry to look very hard to meet the demands of our customers. Next year the information tells us the people want a reasonably priced way to go outside for walking, camping, boating Rving.
May 4th, 2007 at 10:46 am
In a word, it may come down to one reason - Perceptions.
I think people’s perceptions about motorized units is based upon the desire to appear more affluent than they may actually be. Remember the Dezi and Lucy movie [from the ’50’s] “The Long Trailer”? Basically, it poked fun at travel trailers. And for years, travel trailers have [subconsciously] been seen as “Joe Six Pack’s” preferred mode of RV travel (and the industry probably designs them for just such a market share.) That statement doesn’t mean to imply that travel trailers are, or should be, viewed as inferior. They are actually more practical in their applications. But the societally-viewed difference between driving an RV and towing one has created a class-distinction gulf in opinion. And that’s just human nature.
It really doesn’t matter what particular type of RV unit we’re talking about - the real issue to be discussed at this time should be “What’s the best way(s) for dealers to react to the economic landscape?” My ‘pat’ answer - stop thinking you’re going to get a 40% markup on everything you sell and focus on after-sales appreciation through various types of incentive programs geared towards making the customer feel satisfied that they chose you to do business with in the first place. Even if you offer a “Free oil change and filter” at the 5K mile mark to select [or not] customers (and how much is that really going to cost you?), what you’ll get in return could well be the very thing we all want to keep happening - continued good PR by word-of-mouth. Do whatever it takes (within legal boundaries, of course) to make your customers happy! Use your imagination and you’ll be surprised at how much people will appreciate your ongoing interest in their satisfaction. You’d want that, too, wouldn’t you?
“Ya’ll honk as you go by.”
May 4th, 2007 at 6:16 am
There are two main issues and they have both been covered very well here. People are very reluctant to take any more money out of their perceived real estate equity. This is especially true here in the Northeast where property values have really plunged. This situation is impacting other luxury purchases and large home improvement projects. People are simply not going to take money out of a rapidly declinging investment.
The second consumer concern is escalating gas prices. I think this will be a major deterent to new purchases this Spring and Summer but will hopefully rebound in the Fall. It is giving people cause for concern and a reason to delay their discretionary income until they feel more comfortable about real estate, the economy, the war and gas.
I believe the greatest impact is on the very group of people the industry has seen an increase in sales activty over the past few years … young families and the 35-55 age groups. Young families because they can afford to wait a year and see what happens, and the 35-55 who now fear that the equity they are building up in their homes is rapidly disappearing and they will delay major purchases.
I sure hope I’m 100% wrong on both counts! Please tell me I am . . . . .
May 3rd, 2007 at 10:08 am
Dear Greg,
We are in the west and are not immune to the FEMA trailers but do not really feel any pressure from them. Our sales are totally in the tank. Gas certainly is a factor but I feel the housing downturn has hurt us considerably more. The quick equity gain in the housing is gone. In some cases it is now negative. Even our local car dealers feel that this is effecting our market more than anything else.
May 3rd, 2007 at 5:52 am
greg,
We recently had a bunch of Fema (used Up) Trailer
brought into our little town and without cleaning, put them
on a closed service station lot for sale. They are in as
rough as can be. I have never seen any new models with as
much wear and tear. The stink will make you throw up.
However, I have sent some new customers over to look at
these BARGINS ?? and they came back and bought a fresh new
or preowned. The same 12 FEMA units are still sitting on
this lot. After a little explaining as to condition ect.
they have been great to sell against. Our trailers sales
are UP !
May 2nd, 2007 at 8:25 pm
Please consider this (I apologize for being so long winded).
1) Years ago, people used vans and large cars for towing travel trailers. The one’s that used pick-ups found they were highway versions of farm wagons and woefully underpowered.
Today, everyone and their brother owns a Ford, Dodge or GM H-D truck (and now Nissan and Toyota are on their way), usually with a diesel motor. These trucks are just as luxurious as a luxury car and the majority now are crew cab (or in Dodge’s case, Mega Cab) trucks.
The pick-up truck is the family “station wagon” of the new “Boomer” millenium and is used as the everyday vehicle. Momma’s very happy with the new truck with that whisper quiet diesel!
Now add to that these factors:
2) The towability of a FW is still inherently better than that of travel trailers. If a person goes to the extreme of a Hensley (awesome hitch system, by the way) or a Pull-Rite, they will actually have more invested than they do in the FW system. They will also have much less stress as they head down the road pulling the FW during less than ideal weather situations. Momma’s happy with the FW!
3) We happen to be a Heartland dealer. I have to say it’s been more fun with this product than anything I can remember since we started back in the ’60s. The reason it is more fun is because Heartland realizes the artist’s pallet is unlimited when designing FW’s!!
They have completely abandoned the production of travel trailers to key on the never-ending strategy of coming up with ingenious ideas and the “WOW” factor in their FW’s.
With a travel trailer, the manufacturer is restricted by weight, length, interior height, exterior storage, balance, excessive hitch weights etc. which are simply not much of a burden on a FW.
Motor homes are now enjoying the luxury of higher GVW’s which in turn allows the manufacturer to be more creative.
I can imagine we will start seeing units with 6-7 slides, extending out the rear or up through the roof!!
The sky’s the limit for creativity on fifth wheels. Momma loves her luxurious new home and she’s very happy!!
That’s also why luxury travel trailers are nearly a thing of the past and trailers are almost exclusively relegated to entry level cost for first time buyers.
4) The FW chassis is also much sturdier to handle the ever increasing size of the unit. You can go to that private front bath/bedroom area without all the shakin’ and squeakin’ of about 99% of the travel trailers. Momma really likes that!!
5) Lastly, more and more people have us deliver that luxurious new FW to a permanent camp-site (right next to the Jones’ new one). It’s all about being “one-up” on the Jones’. Now that momma’s so dang happy, you can bet that daddy’s gonna be real happy!!
Take care and keep up the great articles, Greg!
May 2nd, 2007 at 3:09 pm
I have been in this business since March or 1963. Yes, out west here I think the fuel prices are a factor. I also know that some dealers are having a tough time getting new inventory. Factories have cut yard or no yard, transport companies can not get drivers due to outlay for fuel. They just can’t make a living. One dealer I know here in my home town has had units (open stock yard)that he has waited about 5-6 weeks due to no transport drivers.
The FEMA units are having an effect and the overall cost of living has increased to where the spendable income for younger families have shrunk.
I think the ALL AMERICAN dealer and families that I have talked think Fleetwood has shot themselves in the foot. I know for a fact that some dealers for the Mallard line and the other low end units are planning on or already have dumped the lines. I just worked a show and one subject that came up on a regular basis was the production in Mexico. Out here, that is a major turn off.
$20.00 an hour jobs going south for $4.00 an hour workers.Typical of what is wrong in this country.
May 2nd, 2007 at 1:07 pm
Greg,
Perhaps it is simply a matter of convenience. From personal experience, I can indeed tell you that traveling by motorhome is considerably easier than towing a trailer. Also, I see more people wanting to use their RV for more than just getting to the destination and camping. I’ve even seen class B and smaller class A vehicles at fireworks displays as well as my kid’s soccer games! One more thing, not towing a “toad” is becoming more common in view of fuel economy, difficulty backing up and again, overall convenience. Perhaps this will make my quick-disconnect patents (see http://www.RVLiberator.com) that much more attractive!
George
George Marshall http://www.RVLiberator.com
May 2nd, 2007 at 9:35 am
Greg,
At our store in Connecticut, trailers, offered at the affordable price point, as well as the sale of hybrids are way off. These products are typically purchased by young families, who this year, are really feeling the pinch. If you add up the extra money they are spending to fuel their cars and heat their homes, along with a huge increase in electricity, it’s easy to see why they cannot afford to purchase right now.
May 2nd, 2007 at 8:46 am
I work exclusively for RV dealers all over the U.S. The dealers are telling me sales are flat, up and down. Some of them are on track for their best year ever, where some are struggling. Motorized sales are up in some areas, lower in others. I think we are only a few short months from some major selling. I don’t know if gas price is the reason for slow sales, maybe for a first time buyer, which is what dealers need in order to grow their business. Existing owners, who upgrade already, know the cost to operate. Lets all hope that since 2003 was a phenomenal year, that the owners of those “3 and 4″ year old RV’s will get that itch to buy new again and the dealers will end up with another record year. Greg, great article and see you in Vegas or Louisville!
May 2nd, 2007 at 8:16 am
I think it is pretty obvious the reason. It is the FEMA trailers. 45,000 were bought directly from dealer inventory (and although abused - are competing directly with current dealer inventory), and 100,000 were bought FEMA spec’d directly from manufacturers. The fact that consumers can purchase these units through the FEMA auctions at wholesale (and sometimes above wholesale) is the reason dealers are losing sales. These units are dangerous - FEMA contractors who don’t understand RVs have hacked the 12-volt systems, LP gas, plumbing, etc… The cost to these first-time purchases to refurbish these units is a fraction of what they estimate, if they can find a dealer who will refurbish the unit and risk their reputation (it will take thousands to make these truly usable). FEMA is in the process of auctioning 45,000; and there are still 85,000 being used by Katrina refugees - that will come back through the auctions in the future. There is also an alternative theory involving the meltdown of the housing market - consumers are no longer tapping their Home Equity Lines of Credit for luxury purchases to purchase RVs, LCDs, etc…
May 2nd, 2007 at 7:59 am
Greg - We are a small dealer in Western Kentucky, but I think what’s happening here is pretty much what’s happening everywhere. #1 - Sales are still not great. Ya, we get some, but not the rush we need in the spring. #2 - The manufacturers are tightening up and this means NO YARD! When we do sell a unit, replacements are 6 to 8 weeks out. #3 - because of the nationwide exposure of trailers through the Katrina tragedy, alot of investors decided that they could be RV dealers. This has confused the buyers and in some cases made them stop shopping all together. #4 - FUEL PRICES DO AFFECT THE INDUSTRY!!!!!!!! I hope this insight from the front lines helps!!!
May 1st, 2007 at 1:22 pm
You want to know why the inventroy stocking is down. Why is the 2008 model coming out NOW ? Thats could be why ! What is going to happen come time for the dealers shows. If everything keep going as it is the 2009 models will be at the show in Louisville this year.