RV Weekly

An RV dealer alerted me to an issue he feels has the potential to significantly hurt the RV industry by removing buyers from the market for years.

He was referring to the blossoming practice of making RV loans for at least 125 percent of the value of the RV and extending payments for up to 20 years. In the documents he faxed over to me, it appears this practice is gaining in popularity as several major industry banks are offering the service.

Here’s where he feels it would hurt the industry.  John Smith bought a $21,000 travel trailer in 2005. He wants to trade it in now for a new $42,000 trailer, but still owes $16,000 on the first unit. The factory invoice has a “phony” discount packed into it, so the dealer can immediately write $2,000 off the sticker price of the new unit. The dealership offers $10,000 in trade on the old unit, which is $6,000 less than what the owner owes.

So, the bank rolls the $6,000 into the new loan of $39,000 which includes an extended warranty because, with 15-year payments, who knows what will happen. The dealer is happy because he made money on the sale, money on the extended warranty and a little on the loan, too.  

John Smith is delighted to have a new trailer, delighted to have been able to unload the older unit and delighted that his monthly payments didn’t increase that much. 

Fast forward to 2011, when John wants to trade in his unit for another RV. He still owes much more than the trailer is worth. In fact, unless he comes up with a huge cash down payment, he won’t be able to trade his unit in for eight or nine years — if then.

It appears to me the combination of phony manufacturer discounts, which mask the true value of RVs, and the over extension of credit by lenders could significantly impact the buying cycle for many dealerships.

My source feels the easiest solutions rest with lenders financing only the real or raw cost of a vehicle and requiring more money for down payments. That way the RV industry can ease itself into a correction that prevents buyers from becoming over extended and retains them as active buyers three or four years from now.

Dealers, you tell me, is it more important to have the sale today, or is it more important for dealers to have the ability to sell three to four new units in the 15- to 20-year period covered by a single over-extended loan?

I thought I was having an other-wordly, near out-of-body experience. I was sitting at a table on the final day of the 2007 InSites conference where campground owners and managers had been gathered in Phoenix for a week. The event was a panel discussion involving the leaders of the RV industry.

Standing at the microphone was the highly esteemed and award-winning president of the RV Dealers Association, Mike Molino. He was describing the current state of the RV industry and promoting the need for more professionalism and more partnering among industry players. It was refreshing. Then he talked about the biennial consumer satisfaction surveys that showed 30 percent of the buyers of new RVs were dissatisfied in 1999, 2001, 2003 and yet in 2005.

If you recall, this is the survey the industry stopped conducting because the results weren’t getting any better year after year despite the constant talk about doing “something” to make it right. Better to turn down the volume of complaints than pick up a shovel and hammer and do something meaningful to actually resolve the complaints of RV owners.

Molino then described the meeting in Ontario, Calif., in November 2005 at which the RV industry formed five task forces to make it even easier for people to talk about doing “something” to improve the critical issues facing the industry. At that point, it was as though my soul left my body and I was watching the meeting unfold in a surreal sort of way.

“Each task force worked for two years to come up with examples of practices that get good results. They analyzed root causes of the problems and came up with suggestions on things we could do to solve the problems,” said Molino. “These folks came up with good ideas and ways to address these issues. But word is not getting out. Let’s get the word out.”

You have to understand that at EVERY meeting I have been at where a Committee on Excellence Task Force member has been presenting ideas, it was Molino’s own staff that laid out the rules regarding what I could and could not report. For example, at Committee Week in Washington, D.C. last June, task force chairman after chairman, stood up in front of the committee members and outlined a series of exceptional ideas on ways to improve parts delivery, warranty processes, staff training, industry communications and product quality. Yet, the RVDA staff and RVIA staff frequently reminded me that I could not report anything that was spoken, written, mimed, signed, or conveyed through extra sensory perception for fear of “stifling” debate.

Ironically, there was little debate at the meetings. The task force members who took their jobs seriously and drafted the ideas and presented the suggestions were rarely asked a question by the committee, let alone invited to debate a particular point. The task force presenters were simply thanked for their input and assured the full committee would review their recommendations.

I was allowed to report the official board actions of the RVDA and RVIA which was supposed to review each of the recommendations and pass resolutions or policies in support of their implementation. But, when the board minutes were finally released, the content bore little resemblance to the powerful presentations I had witnessed, but couldn’t report to the industry.

So, I agree wholeheartedly with Mr. Molino that word is not getting out. But there is a reason for it. It’s that the industry associations which oversee the five task forces haven’t released a single committee report. I sense that Molino is ready to make that information available for a true industry debate. And to be honest, the task force members who worked so dilligently to research best practicies across multiple industrys and formulate workable solutions to our problems deserve to have their ideas heard.

Consequently, I would like to offer the services of RV Trade Digest. If RVDA or RVIA simply sends me the committee reports, I will have them posted on our Web site and even e-mailed to 8,500 key players in the industry within 60 to 90 minutes of my receiving them.

If the desire of key industry leaders is to get the word out about task force recommendations, then they cannot stifle the industry’s journalists who make a career out of disseminating information.

If we truly desire an industry debate on parts availability, warranty, training, communications and product quality, then give the industry something to debate. Release the task force reports. Today.

I had to laugh as I scanned the headlines of the Drudge Report today.

The first story I saw was that federal debt in the United States was at a staggering $9 trillion — or $30,000 for every man, woman and child legally living in the country. You can read it by clicking here.

The next story I saw was how our ultra-efficient Congress, ignoring the staggering number above, opted instead to focus on forcing employers of family-oriented businesses, like campgrounds, to hire transgender employees. You can read it by clicking here.

Since the U.S. Constitution requires all spending bills to originate in the House of Representatives, it appears as though our elected leaders have completely and forever lost grip with reality and their constitutional responsibilities.

As the U.S. dollar collapses around the world . . . as we wage war against a group of people who believe they gain entrance to heaven by killing innocent people . . . as our nation continues to be robbed by rising costs of foreign oil because we can’t access oil under our own lands — the U.S. Congress feels it’s more important to convey civil rights protection to a tiny group of people who choose to make sexual activity the focus of their lives.

What was that about fiddlers playing as Rome burned? 

While attending the National Camping Show in Phoenix this week, I’ve become envious of the campground owners. They are a highly-energized, but laid back group of people who truly enjoy helping RV owners have a good time.A common theme has emerged in talking with the campground owners and managers. They all say they work hard – very hard – but find the job rewarding and relaxing at the same time. Many campground owners are refugees of Corporate America. Many are family-owned businesses. And all report they had a great season this year.

When I asked what it is that causes them to work so hard, I expected to hear about the constant check-ins and check-outs, routine maintenance of the park, and enforcing noise rules. But that wasn’t it at all. That’s the fun part of the job, they say. There are challenges, such as facing Mom and Dad who have just driven four hours to two days cramped up in a car with fighting kids staking claims to their side of the seat and begging to know “are we there, yet?” I’ve been there, done that and got the T-shirt. It’s not a fun way to travel and it adds more stress to the “vacation.”

These people arrive frazzled and on the edge of a nervous breakdown, but the campground owners live for this type of challenge – to help melt away the stress by keeping the kids temporarily occupied so the folks can take a breather. That’s a positive kind of stress that campground owners are accustomed to dealing with and they often find reward in seeing customers come to life after a few hours or days outdoors.

Most of the campground owners I’ve talked with this week have said the biggest challenge for them is in dealing with difficult customers who believe the world, if not universe, revolves around their very lives. Demographics apparently plays a role in determining whether a camper is generally happy and easy-to-please, or hell-bent on fault-finding and complaining. The campground owners have made these observations:

• Baby Boomers are the most demanding customers in the marketplace
• But the Boomers are willing to pay well for quality service
• The more expensive the RV, the more difficult it can be to make customers happy

Several campground owners noted that drivers of big, expensive rigs are rarely happy with their campsites, their neighbors or the amenities of the park. When they complain, they always preface the complaint in the same way:

• “I’m a vice president of such-and-such and own a $335,628.97 motorhome and you want me to park in THAT site?” or
• “I just drove 1,366 miles in my $335,628.97 Type A diesel motorhome, why can’t I have a site this weekend that isn’t anywhere near children?”

By contrast, the owners of folding camping trailers rarely complain, the park owners said. They are grateful for the amenities offered by the park and are often among the friendliest campers in the campground.

I have not heard this type of comparison from RV dealers. But, it fascinates me. I have often wondered why an RV dealer wouldn’t stock motorhomes and opt to focus on towables only. I suspected it was due to the cost of maintaining a floorplan and in repairing RVs with engines. But, perhaps these towable-owner dealers have come to the same conclusion as campground owners – that people who buy expensive motorhomes are difficult to please.

So my question is, from a dealer’s perspective, do customer egos and attitudes change as the buyers move up the line from folding campers to towables to motorhomes?

Also, in the RV industry, can generalizations be made about customer service requirements based on age or income?

I realize that the goal is to treat all customers the same. But, must dealers adjust their tactics and strategies in providing customer service due to the demands and expectations of particular demographic groups?

Please take a minute and let me know. You can remain anonymous.

The story that broke late last week that several large RV dealerships were going to lose their Camping World stores after refusing to sell their dealerships to FreedomRoads is an interesting one, indeed.

I received several phone calls Friday afternoon from RV dealers and others in the industry telling me about the “big news.” Digging into the story seemed to confirm many of the details I had heard, if not through outright confirmation, then by carefully worded non-denial denials. The story made sense to me because it seemed to follow the modus operandi of how Affinity Group’s companies seem to treat other firms.

• Campground owners have long realized that if they don’t advertise or reduce the size of their ads in the Woodall’s directories, their site ratings mysteriously fall that year.
• Dealers who submit customer names for camping discounts through Good Sam Club find their own customers solicited by Affinity Group’s other corporate entities.
• Dealers who agree to stock Woodall’s directories in their accessory stores treat customers to many pages of advertising for Camping World and other AGI entities — it’s like putting competitor flyers at the front entrance to the dealership.

So why wouldn’t FreedomRoads strong arm a dealer into selling his location and then retaliate if the dealer turned the company down? Worse things have happened in our competitive, capitalistic marketplace.

Then, an amazing thing happened Saturday morning. Marcus Lemonis himself called my cell phone to discuss the story. Marcus wanted me to have the “facts.” It was an amiable conversation in which he outlined his rationale for closing the store in Clarksville, Ind. He also denied threatening to pull the location in Amsterdam, N.Y., but said he wanted to keep his options open. He outright denied claims that the Katy, Texas, store was closing because it was already attached to a FreedomRoads store, not Holiday World of Houston.

Marcus spent a great deal of time reassuring me that FreedomRoads is not a bad company and that he’s not a bad guy, and I don’t doubt that. But the whole FreedomRoads/Camping World saga does raise some questions.

Marcus claims there is a stone wall — he called it a Chinese wall — separating FreedomRoads from Camping World and both from the Affinity Group. He said they are separate companies operated independently under a common owner. In fact, he cited Berkshire Hathaway as a similar example noting that the megacorporation owns Dairy Queen and Fruit of the Loom.

As independent companies, Marcus claimed there was no exchange of information between FreedomRoads and Camping World and the Affinity Group. My how I wish that was true. It’s hard to imagine completely separate entities being run as independent businesses under the direction of the same two people — Marcus Lemonis and Steve Adams — when FreedomRoads stores are hosting Camping World locations and Camping World RV Sales stores are popping up all over the country.

It seems so much information is exchanged between the three companies that some believe a stone wall really insulates the conglomerate from the industry, but that a white picket fence separates the companies within that wall.

This summer, I spoke with several former FreedomRoads employees and even a dealer who sold out to FreedomRoads. I also spoke with RV dealers who have been approached by FreedomRoads and Camping World. I chatted with an independent RV dealer who leased space to Camping World for a store at the dealership’s locations. If there is one undeniable fact, it’s that proprietary dealer information frequently finds its way to Camping World. And from there it is a short hop, skip and jump to FreedomRoads.

Time after time when independent RV dealers exchange customer names and addresses with any company affiliated with the Affinity Group, the dealers’ customers almost immediately begin receiving Camping World solicitations.

In the past it really didn’t matter to the dealers because, for many, there wasn’t a Camping World in their market. The mailings were more of a nuisance because customers would bring the flyers into their local RV dealership asking if the dealer could match the Camping World price.

But, as more Camping World locations pop up around the country, dealers are now finding themselves face to face with a serious, well-funded competitor selling rolling stock either at FreedomRoads locations or through Camping World RV Sales. The customer names and addresses provided in goodwill to Affinity Group companies for some other benefit, like camping discounts, are now being used to draw those customers away from their dealership of origin.

Some of the bigger names in the RV industry have pretty much had enough of this tactic. A few lawsuits are pending and we’ll keep an eye on those as the cases unfold. Several are claiming that FreedomRoads/CampingWorld/AffinityGroup have breached a contract or non-compete agreement in the way they enter a market or market products. It could get ugly as manufacturers are drawn into the fray over territorial rights.

Gold Medal Camping World dealers who have leased space to the store or, in some instances, designed new facilities to specifically accommodate a Camping World location are learning a tough lesson as Affinity Group’s FreedomRoads subsidiary buys out a nearby dealership and opens up a Camping World store on that site. The dealers who designed and leased the space hoping to draw traffic to their locations are left holding the bag as their customers are enticed to the new location.

As I have said in this space many times before, it’s not that I have anything against Camping World or Freedom Roads or even Affinity Group. Independently, these businesses would be good for the RV industry. Joined together, I think they are dangerous for their ability to control and influence a huge segment of the market.

Yes, Berkshire Hathaway may own Dairy Queen and Fruit of the Loom. But they are two very different companies operating in completely different markets — and you don’t see many Fruit of the Loom displays in Dairy Queen locations, nor do you receive underwear coupons with your Dilly Bar.

If AffinityGroup/FreedomRoads/CampingWorld is serious about creating a stone wall between the companies, it would be nice to see a cement truck in the neighborhood.