RV Weekly

March is the month when a good portion of RVs come rolling onto dealers’ lots. In fact, March is the biggest month of the year for RV shipments. Dealerships are stuffed to the gills with brand new inventory and advertising efforts kick into high gear to move it off lots.

This March was a little different because the units trickled in to dealers instead of having a mass March product infusion. The recent data from RVIA shows that March new unit RV shipments in every category were down. Motorhomes topped the list with a 35 percent decline from last year and towables were down by almost 10 percent. Check out the numbers here.

Some claim that towable RV sales are directly linked to truck and SUV sales. I think they are related but so many factors play in to it. It is difficult to compare RV new unit shipments to truck new unit shipments because of distribution differences within the two industries but we can look at new unit sales for tow vehicles.

New truck and SUV sales universally dropped by double digits in March. General Motors’ March truck and SUV sales were down 22 percent. Ford reports March truck and SUV sales dropped 16 percent. Toyota Motor Corp. says March was down 14 percent from same month sales in 2007. Nissan was down 20 percent and Honda was 12 percent.

According to the American Bankers Association, consumer’s auto loan payments made to dealerships (indirect auto loans) are being made late at the highest rate on record—3.13 percent. Late auto loan payments to banks (direct auto loans) are at a 2-1/2-year delinquency high of 1.9 percent. In essence more people are having a tougher time making their truck payments. On the bright side, this means that 97 percent of consumers are doing just fine paying their truck loans. Hopefully, they will have extra cash to add a new RV as well.

The drop in new unit RV shipments could mean a variety of different things. It could mean dealers already have plenty of RVs for the busy summer season and their days inventory has increased, so they have no need for new units. It could mean that dealers are anticipating selling fewer units this year and see no reason to incur interest charges on units that they believe will just sit for a lengthy period of time. It could also mean that manufacturers are delivering units a little later in the year and we will see a surge of shipments in April or May.

Interpreting the data can be done any number of ways. It would be interesting to see how dealers from different parts of the country perceive the data. It would also be interesting to read dealers’ perceptions on how tow vehicle sales will impact this year’s RV sales. Do decreased truck and SUV sales foreshadow tough times for the travel trailers and fifth wheels?

Nearly 10 years ago, the Committee of Excellence conducted a study to see how happy RV consumers were with their overall RV recreational experience of buying, owning and using an RV. What the study revealed was astonishing — nearly 25 percent of RV consumers would never purchase again and would tell their friends that buying and owning an RV was a bad experience.

Over the years additional studies have been conducted to make sure the report was not an anomaly, and the results were very similar. To address the issue, five areas were identified that consumers complain the most about. Task forces were assembled to figure out the best ways to address the five major complaints of consumers. The reality is all five areas center around a single problem – RVs breaking down and not getting fixed quickly.

How upset would you be if you bought a car and within the first week of owning it, something broke on it? When you returned the vehicle to have the problem fixed, they told you it could be anywhere from a several weeks to three months to fix the problem. Would you buy from that dealership again? Would you buy that brand again? Heck, if you didn’t really need the vehicle, would you even bother owning one? The contributing factors to this problem are so diverse that it has taken several years and countless hours donated by a host of really bright volunteers just to figure out a plan to fix why RVs break so often and why they can’t be fixed in a timely manner.

All of these problems center around one thing — money. The push in the industry has been to bring down the cost of RVs so they are affordable to a larger number of consumers. More consumers able to buy RVs equates to increased sales. Everybody makes more money. The problem is that the infrastructure to support the increased sales was never developed and lowering the per-unit cost came at the expense of quality. The pool of consumers is so great that 25 percent attrition was acceptable. It is a classic case of volume over margin.

This race to the bottom line has affected the entire RV distribution chain from supplier, to manufacturer, to dealer. Competition to lower price has impacted everyone in the industry, forcing them to cut costs and consequently, quality, just to stay in business. There are a number of manufacturers and dealers whose primary business niche centers around producing and selling the lowest-priced RVs. They have mastered this business model and have no incentive to change because they are making money. If 25 percent of their customers are unhappy, that’s acceptable, because unhappy customers’ checks cash just as easily as happy customers’ checks do once a contract has been signed.

The only way this will change is if there is a public relations fall out and the money disappears. This is on the horizon because consumer demographics are changing. Generation Y tolerated the headaches of RVs breaking, but subsequent generations are not as tolerant. When this happens (and it will soon), good businesses will suffer alongside the low-cost, volume RV manufacturers, suppliers and dealers.

This is why the task force’s work is so vital to the industry. As an industry, we must change the way we approach everything when it comes to making and selling RVs. If we have the foresight to implement the task force’s recommendations, we can avoid the looming PR nightmare and continue to grow.

There will be resistance by some in the industry because they have a good thing going with inexpensive, poor-quality products and poor customer service, but we cannot let them define our industry’s future.

They say never to talk about it. It’s one of the two big no-nos, but blogs break all the rules — so what the heck, let’s break the rules for a change. Shoot for the moon, I say. I’m talking about politics. We know that Obama is an active RVer, but I’m told that when Cheney travels by airplane he does so in a very large plane with an RV loaded in its belly. Cheney’s staff refers to this RV as “the Silver Bullet.” I don’t know for sure, but that may very well be an Airstream. Has his traveling in an RV (by plane) had a direct or indirect impact on our industry over the last eight years? Hard to say, but I doubt it. If Obama is elected, will it have a direct or indirect impact on our industry? Again I’m not sure. Hillary? (shrug) I’m told Chelsea Clinton, Hillary’s daughter, pulled into Carnegie Mellon University in a Chateau RV today. Does that mean anything?

At RVIA’s annual meeting, a presentation was done on how each candidate, if elected as president, might impact the RV industry. Would we be better off with a republican or democrat? Would Hillary be nicer to us than Obama?

What about McCain? Is he an outdoorsy sort of guy?

Now I realize that who is put in office may impact a whole host of things that could directly or indirectly impact our industry in different ways. For instance, if a democrat is elected, it will most likely mean an increase in ma and pa’s taxes, not to mention business taxes. On the other side of the coin, if a democrat is elected they say they will do something about the price of oil and promise to end the war. If a republican is elected they promise to do something about immigration reform and will bring economic stability to the U.S. and overall stability to the Iraqi nation. Nearly every issue you can imagine that is important to any segment of our population will be impacted in some way, shape or form. The question is “how?” I sure don’t know.

My experience with government is that it is so slow moving that progress on any front, on any issue, is nearly impossible. Even when a party dominates both the executive and legislative branches of government, there is always the filibuster.

It can be really frustrating when it appears that politicians spend most of their time drawing things out to prevent anything from being accomplished, rather than actually providing solutions to the nation’s problems. A really great example is the mortgage mess that has been going on for more than a year. Congress has had more than 12 months to offer a solution. This issue has impacted the RV industry, and on a greater scale our economy so drastically, it’s truly amazing nothing has been done yet. I suspect the real reason is because nothing can be done with so many people involved. They say the quickest route to getting absolutely nothing accomplished is to form a committee. Our government is one big committee.

My question to bloggers this week is: who will be the best presidential candidate for the RV industry, and why do you think that? I hate to say this, but as with all blogs, remember to be nice with each other as we discuss this, or I may delete your comments.

BY DANA NELSEN

Anyone who has recently experienced the joy of airline travel can attest to the fact that it is not what it used to be. A recent Associated Press story says that consumer complaints are up 60 percent this year. To say airline customers are unsatisfied is an understatement.

When I tell people I travel extensively for my job, most people respond with “Oh, that must be wonderful to go to so many places.” Well, traveling for business is much different than traveling for vacation—or is it?

If nearly stripping down to your boxer shorts to go through security were the only travesty, airline travel would be a joy. I think most people are more than willing to endure a little inconvenience for safety’s sake. But even so, I think I would dread herding the family through airline security even for a vacation.

Once through security, there is no guarantee travelers are going anywhere. In fact, odds of beating the house at blackjack in Vegas are almost better. In the story mentioned above, late flights are at an all time high with 25 percent of all flights being late. Atlantic Southeast Airlines reportedly has the worst record of all with 33 percent of its flights being late. But the airline is not alone. Universally, late flights have increased for the fifth year in a row. This is not just an airline fad but an ongoing and unending travel trend.

Even if the plane is on time, overbooking passengers has become the rule of thumb, so getting bumped off a flight is a real possibility on every trip. On my most recent flight to Oregon, a family of four heading to Seattle for vacation had no designated seats on the plane. They were allowed to board anyway. A business traveler ended up relinquishing his seat to enjoy one of the flight attendant’s “flip down” seats, just so the little girl in the family would have a “real seat” during take-off and landing.

Factor in how people with “real seats” are mashed in so close together, the proximity borders on indecency. And customer service … it’s non-existent. It won’t be long before airlines merely hand you an advertisement for a bag of pretzels rather than any actual food. If travelers politely ask for an entire can of Coke, rather than the tiny glass offered, the pilot may just land the plane because passengers are being out of hand and obnoxious.

When it comes to luggage, I personally have had my luggage lost so many times that I now refuse to check my bags. In fact, I’ve never had my luggage arrive with me when checking them. No, not even once have been at baggage claim when I disembark from the plane. I would rather travel with nothing more than aforementioned boxers and just buy clothing upon landing than go through the nightmare of lost luggage again. Out of necessity, I’ve become very adept at traveling with just a carry-on bag.

The GO RVing campaign might consider doing a TV commercial on just how dreadful going on vacation can be when flying as compared to traveling in an RV. I know I’d rather head to my next business appointment in a nice Class A. Heck, with the inflated price of airline tickets of late, it would probably cost far less.

Wouldn’t it be great if every company in the RV industry could double the price of their products without an increase in production and still have endless customers clamoring for products? What if on top of that the U.S. government kicked RV companies billions of dollars in tax breaks to figure out ways to make and sell more RVs, more satellite systems, more hitches, more toilet chemicals etc.?

That is exactly where big oil is currently. With capitalism governing the price of a barrel of oil, there may be little we can do about the price we pay at the pump. Some people complain that the government should do more to lower the price but I am not sure if that is even possible.

I guess they could lower taxes tagged on gasoline but that would come at the expense of our bridges and roads. In the last year, we’ve seen news reports that the nation’s bridges are in a terrible state of disrepair, so that doesn’t seem a viable option.

Another thing to consider is just last week, the Associated Press reported that there are gasoline shortages in China and when oil companies offer oil for sale, that oil is going to go to the highest bidder. Sadly, if China is willing to pay $110 a barrel, then unless we are willing to do the same, the oil goes to China. The last thing we need are oil shortages like the industry saw several decades ago.

The oil-producing companies have learned that they can produce the same amount of product despite increased demand from developing countries and get paid far more for the same amount of effort they have historically produced. Realistically, they call this working smarter instead of harder. We would do the same if we could, but that doesn’t mean we have to like it. It appears high gasoline is here to stay.

The real grind is the $18 million in tax breaks oil companies currently enjoy. Senior executives from five of the major oil companies go before a congressional committee today to explain why they still need these tax breaks. Exxon Mobil Corp., Shell Oil Co., BP America Inc., Chevron Corp. and ConocoPhillips, will testify. The Associated Press reports these companies earned a total of $123 billion last year from soaring oil and gasoline prices. Do they really need those tax breaks?

The House of Representatives has approved legislation two times in the last year to end the tax breaks. The revenue was supposed to instead go to booster renewable fuels, wind and solar power. Unfortunately, neither of the House initiatives passed the senate.

I wonder if the tax breaks are taken away, will the oil companies merely pass this additional cost on to consumers driving prices up even higher. The saying, “nothing comes for free” comes to mind.