RV Weekly

In speaking with a dealer, recently he posed the idea of asking manufacturers to hold back a percentage of each RV sale that would be sent to the dealer in the consumer’s home area where the RV is registered. The “hold back” would serve as an incentive for the home dealer to give the consumer the same level of service of that consumer who buys directly from the home dealer. The hold back could be a set monetary sum like $2,000 or $3,000 or it could be a percentage of the wholesale invoice price.

Apparently this topic was broached in the dealer’s 20 group and all agreed that this would be a good way overcome the dissatisfaction many orphan consumers feel when they attempt to get service and would ultimately benefit the whole industry.

This idea, to me, may be a good one but it also raises a lot of questions. I’ll leave it up to readers to discuss whether this idea has merit. The first question in my mind is how would snowbirds fit into this equation? Would the hold back be split between the two dealers where the RV spends the most time? Is this the ultimate solution?

Another related issue to this, is the topic of standardized freight. The freight of RV delivery tends to skew the margins dealers make on an RV based on their distance from the manufacturer. Consumers can often get a better deal from a dealer who is located closer to the manufacturer. And even if the dealer doesn’t pass the savings on to the consumer, the dealer comes out ahead on margin. I’ve heard several heated debates on whether standardized freight is a good idea or not. Most dealers located close to the manufacturer of the brands they carry think this is a terrible idea and most dealers who are located far away would love to see it because they think standardized freight would level the playing field and discourage consumers from traveling to dealers located close to the manufacturer to get a better deal. Do you think standardizing freight would help solve the disparity? In my mind, it probably wouldn’t solve the problem entirely because dealers would still put their customers ahead of orphan dealers.

Another related issue would be the difference in price larger dealers and buying groups pay for the same RV as other dealerships. When a company like FreedomRoads can buy at a lower price based on volume, they immediately have an advantage because they can either offer lower prices but still make the same margin or they can keep the difference and be more profitable. This may contribute to orphan dealers also but the network FreedomRoads has created tends to offset the orphan consumer problem. That may not necessarily be true for very large dealership that may also see an invoice savings by buying on volume but do not have the network FreedomRoads has established. Of course there options for those dealers as well with Route 66 and ReDex.

To me these issues seem to be symptoms of the same problem. Dealers are not compensated for warranty work at a level where the warranty work is profitable. Double the rates that manufacturers pay for warranty and suddenly everybody wants to do service because there is a margin that makes it worthwhile. The consumer gets timely service and suddenly consumer satisfaction rates go through the roof.

So there’s the topic of the day. Let’s hear what you think about these issues.

We recently launched a new “Ask Jan” F&I column on our web site and newsletter. We intend to feature dealer’s questions and Jan Kelly of Kelly Enterprise’s answers each month starting in the January issue of RV Trade Digest. I thought a couple questions recently posed to Jan were very interesting. Read the questions and her answers below:

Hello Jan,

I hope all is well in your marketplace. I have a question I know only you may be able to answer . In today’s marketplace, RV sales have tightened tremendously in placing A+ loans through your major players. The downturn has recently hit RV dealers harder than ever. Your main players of course being Bank of America and Bank of the West. With the credit standards today, and the major player being Bank of America, will they ever consider bringing back to the industry “Empower Programs” or is this a thing of the past?

Kind Regards,

Ron

Ron,

What I gather you are asking about is will the lenders bring back instant approvals to the RV industry?
History has shown that when any lender pulls something away, it is because whatever it was had a history of being abused by the client. No one knows the future, realistically; all we can deal with is the present. At present the lenders want each customer to have an equity position in the deal. That means sales personnel are going to have to ask for down payment.

In working with sales consultants, I realize that they do not want to ask any questions that open the door to a negative answer from the customer. Rather than asking “Do you have anything that can be used as a down payment? Perhaps a better way would be a question like this: “The lenders would like to see customers in an equity position, they would like to see 25-30 down, how close to that can you come?” The question is worded in such a way as the response is something other than a negative. The sales consultant can quantify what the customer has.

Keep in mind, just because the sales consultant does not have anything in savings, does not mean their customers do not have resources. I think quite often the sales consultant places their own economic situation into the mind of the customer.

Ron, let us remember the past fondly, work in the present to make something happen, and hope for a better brighter future!

Jan,

With credit scores trending downward, traditional banks tightening up their approval thresholds, where do we go to get “Joe Plummer” funded for his RV without resorting to a blood bank? Joe would have been tier 1 two years ago, tier 2 last year and today he’s a TD with his 650 FICO, which had been 720 in not so many months ago.

Regards,

Bill

Dear Bill,

This market requires F&I managers to look to local lenders to fund the loans. You will need to create the relationships with the local credit unions, and local banks, thrift and loans offices. Opportunities are in the market place, they simply are not knocking on your door. You must get up and go out and discover them yourself.

You are also not going to be in a position to object to the rates the lenders are charging. If you want to make the deals, your reserve income will be lower than previous years. All that means is that you will need to sell more ancillary products and services.

Many dealership are looking for the magic solution for this lending crisis. The magic is this customer must have down payment. Lenders want equity, and they do not care if the customer is “Joe the Plumber, or ?”

The question I have for dealers today is are you seeing some of the things these dealers are? Do your salespeople balk at asking for a down payment or is this something they do with every customer? If you have questions for Jan, don’t hesitate to write her at jankelly@rvtradedigest.com

If you have been following the RV trade news of late you may remember a story of a manufacturer out of Wakausa, Ind, who’s manufacturing plant caught on fire and destroyed everything– Living Lite RV.

This small manufacturer may not be on your radar because they make smaller trailers comparable to pop-up tent campers and have a relatively small dealer network. I am happy to report that they have secured a new location and are already filling dealer’s orders.

What makes this particular manufacturer stand out is the product they have been producing for the last five years. With reports of consumers abandoning trucks and SUVs for lighter-weight, more fuel-efficient, greener automobiles, is Livin Lite ahead of the curve? Some question whether the Quicksilver RV they produce can really be called an RV? I guess it depends on how you define RV.

The units don’t have a stove, refrigerator or bathroom. Slide-outs and AC are not available options. It does have an electrical system but does not have LP gas. What it does offer is an aluminum-framed camper that sleeps six and can be towed by the every-day man’s car. So you get the same space as a pop-up without the weight and it can be used by more than merely two people making it a viable option for families.

In talking with Livin Lite owner Scott Tuttle, he told me that dealers who compare it to a pop-up really don’t grasp the concept. The vehicle is designed to be towed by smaller vehicles like the Ford Escape or Honda Civic.

Tuttle’s Quicksilver RV appears to be gaining the attention of dealers. He says he left RVDA’s convention with a multitude of orders from new customers. Quoting him directly he said:

We are not going after the same customer. We are going after those thousands of car and minivan owners who drive past your lot everyday because they have no reason to stop. I honestly believe if that if RV dealers would grasp the concept of what we are doing, it will help increase their travel trailer, fifth wheel and motorhome sales in the future. We are bringing more people into the industry that were never in it before. These are the people who were left behind when the industry started building pop-ups that got heavier and heavier and more expense with all the amenities. What about those young families that only have one job that want to go camping and only own a Toyota, or Ford or a Chevy Cavalier?

Do you think Tuttle is right? Have we moved away from the common family’s ability to use the majority of our products? Are all the luxuries (I can’t believe I’m typing this) of a pop-up trailer truly needed?

He argues that the unit makes sense from the business perspective too because his units sell for $4,900 to $6,300 retail and that if dealers only marked them up by $1,000 each, they would make an estimated $13,000 in profit if dealers purchased 13 units –the equivalent cost of a single luxury $55,000 travel trailer.

Is the industry moving in this direction now? Is providing RVs without all the creature comforts visionary or loopy? Is this the ultimate green option for a whole host of people who wouldn’t and couldn’t buy what sits on an RV dealer’s lot today?

I’ve been covering technician training issues for a long time and in the last few years the industry has come a long way. I’ve witnessed the development of single website calendar source for the industry’s training endeavors. I’ve seen the Florida RV Dealers Association lead the way on many training initiatives including its work through the Distance Learning Network. RVIA developed a comprehensive website 9now hosted through the RVDA’s RV Learning Center) with item by item content teaching technicians what they should know to be effective in their job. And RVDA has made leaps and bounds through its RV learning Center offerings.

I remember attending my first RV Service Training (RVST) Council meeting at RVIA’s trade show a few years ago and listening to the members of the council express frustration at the lack of progress on this issue.

The crux of the problem has really been two-fold. First, the business of training is generally not a money maker. RVDA has put an enormous amount of effort into developing text books for various career paths in the parts/service area. Despite this endeavor, the books haven’t sold as well as they probably should.

The RV tech training schools across the country have had surprisingly low attendance despite a well-documented shortage of RV technicians in the industry. The schools truly add value and this is apparent because some students get snapped up by RV dealerships before they have had time to complete the program. Because of the low student participation, the schools have struggled to stay open. The RVIA Trouble Shooter Clinics for technicians are also suffering. Due to low registration, they canceled one of the venues this year. The Trouble Shooter Clinics are especially important because they offer technicians an opportunity to learn diagnostic tricks for tough repairs.

The 2nd part of the problem is that our two industry associations often disagree on whose turf training falls into. RVDA believes that training dealership employees are a dealer’s responsibility and that they should lead any such endeavors. RVIA’s members manufacture the products and thus should be better equipped to conduct the training. They are most often the ones who foot the bill for traveling the country to conduct technician training in dealerships and other venues. Naturally RVIA has its reasons for wanting to be in charge of tech training too. Both have very valid reasons for wanting to oversee this aspect of education.

Lately, I’ve seen signs that the training issue is being pushed to the back burner with the economy impacting the industry. I understand we all have real challenges that take priority but the trend of cutting back on training seriously concerns me. An example, due to mandatory budget cuts, RVIA recently laid off its Director of Education. For as long as anyone can remember RVIA has had someone in this position. I think the position plays a vital role in helping facilitate our industry’s training and really question RVIA’s decision on making this tough choice and not having a director of education.

For a long time I’ve sat on the sidelines and merely reported on technician issues and training but have always wanted to contribute in some greater way to this important issue. Alas, sometimes the industry press is viewed as “the press” rather than an active member of the industry (which is very narrow-sighted in my opinion) and my many offers to help any way I could have never been taken advantage of. They say, “See a need and fill it,” so that is what RV Trade Digest is going to do. In my many years covering RV technician issues, I’ve learned that there are times when technicians run into problems when trying to diagnose and fix RVs. Getting an answer quickly to what may be wrong with a water heater, furnace or electrical problem can be difficult and time-consuming when technicians have limited resources. Having an experienced reliable resource to fire a technical question at would be an awesome benefit to technicians nation wide. Why hasn’t this already been done?

There has been a fear by some in the industry that if technicians ever start communicating with each other they will discuss their salaries, flat rates and other taboo subjects. Another concern that has been brought up is that dealers wouldn’t want consumers or competitors to necessarily know when their employees have questions about certain repair issues. Those are valid concerns but I believe technician networking can be used in a very positive way where those issues never happen.

They say “Identify a problem, find a solution.” To that end RV Trade Digest will start a new technician forum where they can pose difficult repair and diagnostic questions that will be monitored by seven industry leading RV technicians who will answer questions and moderate the content so no taboo subjects are broached. Every time a post is made, the post will be immediately e-mailed to 10 different moderators who will review the content to make sure there are no problems. Gary Motley of Motley RV has volunteered to work with me on the forum and offer this resource to the industry. While the forum will be moderated by the seven “major league” technicians to answer questions, I want to encourage technicians industry-wide to participate in the forum and help each other out by answering each other’s diagnostic and repair questions.

The rules will be simple:
1. Don’t talk about money: that means salaries and compensation, flat rates, warranty payments, or labor rates charged to the consumer, etc.
2. Do not put self-identifying information in your posts. (Just use your first name and the state where you work) i.e., don’t include your last name, the dealership name where you are employed or the city in which you work. And do not post your e-mail or phone number anywhere in your post.
3. Be nice. Offer your opinion and technical advice without degrading companies or people in the forum.

As we move ahead with this in the next couple weeks, I’d like some industry input as to any other concerns we may need to address prior to launch. Let me know your thoughts. If we get it right in the very beginning, make the rules abundantly clear, and then closely monitor it, I believe this will be a valuable resource for the entire industry.

This week RVDA released a statement asking for those who attended the 2008 RVDA show/expo to participate in an evaluation of the event.

RVDA put together two evaluation forms: one specifically for the educational workshops and the other for the overall expo.

While working on a story for an upcoming issue, one dealer mentioned that he would like to see the convention feature more hands-on training in their workshops. This dealer mentioned several times that he was not “knocking” RVDA’s efforts but thought some of the seminars, for those who attend this convention annually, are “repetitious.”

If you would like to give feedback to RVDA directly visit this Web site.
http://freeonlinesurveys.com/rendersurvey.asp?sid=0ymvknl142fjx5u489278

Please share your thoughts of the 2008 RVDA show with RV Trade Digest by leaving a comment.