RV Weekly

Who said little consumers don’t have any power against big businesses?

Never before in the history of the world has a single person enjoyed the ability to take on a huge corporation for as little money as it takes today. Welcome to the YouTube generation. 

For those of you just waking up in the 21st century, YouTube is a phenomenon in which ordinary citizens post their own videos that others can watch over their computers.  You can watch silly things, serious things and the most ridiculous time-wasting material to ever clog the information super highway. You can post a video of your wedding, your kid crawling, your father snoring, your dog smiling pretty, and your RV dealer scamming you out of your hard-earned money. The Internet is filled with videos and stories about people who are unhappy with their RV or their dealer. For example:

One complaint about Recreation Plantation in Illinois was viewed 196 times. Check it out here: http://www.thesqueakywheel.com/complaints/2007/JUN/complaint14351.cfm

A Canadian RVer took issue with the construction and amenities inside all RVs. Read his review here:  http://www.ucalgary.ca/~schultz/culling.html

A customer from Todds RV in North Carolina looked for others who had similar poor service problems. See his complaint here: http://www.rvusa.com/forum/mbbs22/forums/thread-view.asp?tid=6009

The point is that all this was found in less than five minutes by doing a few Google keyword searches. In the past, people who bought a lemon had little recourse other than painting their unit yellow and driving it around town bearing a sign saying “I bought this lemon at XYZ RV.”

Today, they can take a $100 video camera or free cell phone and prepare a walkaround video showing everything wrong with their RV. Or, they can launch a sneak attack on a dealer by recording a service call conversation or a sales conversation trapping a dealer in a lie or a hostile response, only to post that conversation on the Web for everyone to hear.

But, isn’t recording a conversation illegal? Yes and no. Most states require that only one party in a conversation consent to being recorded.  The federal government and 27 states don’t have any laws prohibiting “hidden cameras.” You can check out your state’s laws by clicking here.

For $20 and a seventh grade understanding of technology, anyone can purchase a domain name and publish a Web site in 45 minutes that will be indexed by Google and available around the clock to people throughout a specific marketplace or the world. The Web site can document every phone call with a dealer, every broken promise, copies of invoices, sales literature, letters, service contracts and photos of every problem with an RV. RV owners can even place hidden cameras in their units to catch service techs rifling through drawers.

Big deal, you say? It is — really.

For another $20, any consumer can purchase 2,000 links to appear when anyone Googles a specific dealer name or manufacturer. If they are really mad, for a few dollars more they can buy top position in the search engine results. Heck, if they generate enough traffic, they can pay for the site by posting Google ads linking to your competitors.

Imagine Joe Consumer looking for XYZ RV’s website — the dealership he passes every day on the way to work. He enters XYZ RV in Anytown into his Google search bar. Less than a second later, up pops a bunch of potential sites, including:

• www.xyzrvsuperstore.com
• www.xyzrvstinks.com
• www.avoidxyzrv.org
• www.xyzrvhorrorstories.net

Which site do you think he’ll visit first? How about second? And let’s not get started on blogs and forum sites. Every week, I get alerts from Google and Yahoo in which their electronic web spiders have stumbled upon another disparaging remark in a blog or forum directed against a specific RV manufacturer or dealership.

You’ll sue ‘em, you say?  Sure. Three years and $20,000 later you might convince a jury of consumers to support you in the action, but only after the irate customer posts a daily blog about his underdog case against the big, bad dealer/manufacturer.

So what’s the point? Be careful. Train your staff to deal with disgruntled customers. They will never know when they are being recorded. And work hard to resolve EVERY customer complaint to the point if he isn’t completely satisfied, at least he won’t be blogging about the transaction with his faceless buddies around the globe. 

Last week, hundreds of RV dealers gathered in Las Vegas for the 2007 RV Dealers Convention/Expo — and hundreds of dealers returned to their businesses this week fired up and flush with new ideas for improving and expanding their businesses.

For the thousands of other RV dealers who ignored this year’s convention, an unsettling question remains: What can RVDA do to make the convention more appealing to more people.

That was actually the talk of the convention as even RVDA staff noted attendance was down about 8 percent this year. In fact, during the association’s annual meeting Sept. 27, RVDA President Mike Molino reported that this year’s show attracted 1,827 people and that 325 RV dealerships were represented. That means less than one in 10 RV dealerships were represented at the show. It’s hard to educate people when they don’t show up for school.

In talking with dealers and suppliers before, during and after the show, I’ll pitch out these observations and suggestions to give the RVDA Show Committee something to discuss at this year’s post mortem session.

Let’s start with dealer concerns. First, the show is prohibitively expensive. Prior to the show, many dealers I talked to indicated they couldn’t afford to participate. It’s not that the show dates conflicted with one of their busy business periods; it’s that the show itself is too expensive.

For example, the cost for a single person to attend the show is $888 for RVDA member dealerships or $1,088 for non-members — a hefty price considering that’s just the cost to attend the educational sessions and trade show. Dealers must tack on the cost for airfare, four or five nights of hotels at $149 per room per night, cab fares and extraordinarily expensive Las Vegas meals.

RVDA claims the value of attending the convention is actually $1,611 and they’ll be quick to point out that people registering before July 31 only needed to pay $507 per person for the first registrant and $443 for each additional participant. At those prices, it is hard to argue against sending several people to the show. However, taken in context with the high costs of attending anything in Las Vegas, dealers already facing a dubious year were understandably cautious in spending money on another show.

Other dealers who were not planning to attend the show indicated the fact the show itself was in Las Vegas — again — as the primary reason they were taking a pass. Las Vegas seems to be an exceptionally popular destination for RV-related tradeshows. Many dealers visit Vegas four to six times per year and, frankly, they are bored with the twinkling lights, beeping machines and scantily-clad waitresses. RVDA will note that they held the convention in other locations in years past, but the best attended shows were always those in Las Vegas.

Some dealers told me they had no intention of sending additional staff members to the RVDA show in Las Vegas due to all the distractions they had to deal with. Dealers who sent staff in prior years claimed they were frustrated to discover employees in the bars, restaurants or casino area rather than in the classrooms. A few were disgusted with the behavior of staff members who stayed up all night drinking and carousing only to sleep until noon the next day and, thus, missing the primary reason why they flew to Vegas in the first place. These dealers opted to avoid the issue entirely by entirely avoiding the convention.

Finally, many people were complaining that the RVDA Show has morphed into a venue at which the same old stuff is presented by the same old people. I will strenuously disagree with that claim. Yes, the presenters in the breakout sessions are often the same people. But we’re a small industry and the experts leading the sessions are generally accepted as the best in their fields. Besides, I feel the topics are always pertinent and relevant to all RV dealerships, especially new staff members. However, the stale factor remains a perception the RVDA Show Committee will need to deal with.

Several suppliers also confided they were none-to-happy about the costs and schedule related to this year’s show. Not only did they have to pay between $2,271 and $2,595 for a 10-by-10-foot booth, they also had to pay $145 per person to get badges for each person manning the booths. Those exhibitors who wanted to sit in on the educational sessions had to pay $380 per person.

By comparison, the cost for a booth at the National RV Show in Louisville ranges from $630 to $1,585 plus a $350 per-booth surcharge tax redirected toward the GoRVing campaign. Badges for that show are free, but no meals are included. And, yes, it would be very easy for RVDA to rack up $145 per person in Las Vegas just for food at a reception, two lunches, a few coffee breaks and an evening celebration.

For many suppliers, the most frustrating aspect of exhibiting at the RVDA Expo is the schedule for which the displays are open. The expo technically opens on Tuesday with a three-hour reception in the exhibit hall from 4:30 to 7:30 p.m. It continues on Wednesday with a five hour and 45 minute session followed by a three hour and 15 minute session on Thursday. It’s the ancillary costs that deter many suppliers from participating.

Consider that most exhibitors can easily arrive on Tuesday and set up the booth prior to the 4:30 p.m. opening at which heavy hors d’ouevers are provided. But many exhibitors wind up taking out dealers for dinner on Day One. The next day, they must feed their staff breakfast and dinner for the 5.75-hour work day and pay for a second hotel night. Day Three is only a 3.25-hour workday. But, unless they can break down the display right at 2:30 p.m. and book it to the airport in time to wade through security lines and catch a direct flight home, they’ll likely have to spend another night in Vegas — and that means another dinner, another breakfast and another night of hotel expenses.

One supplier estimated the total cost of participating in the show easily exceeded $7,000 for 12 potential hours of face time with staff from 325 dealerships after he factored in booth space, hotel rooms, badges, breakfasts, lunches, dinners, cocktails, airfare, cab fare, program advertising, a door prize, golf tournament, marketing materials, shipping costs, internet connections, booth furniture and staff time. That’s a hard expense to swallow, especially when the entire industry gathers again eight weeks later for the National RV Show.

In a few weeks, the camping industry will gather in Phoenix for the first-ever combined show. In the past, Kampgrounds of America held its trade show/educational programming on different dates and in different locations than the independent campgrounds affiliated with the National Association of RV Parks and Campgrounds. By joining forces this year, both groups are expected to see more people participating than ever before. More exhibitors have already committed to participating at the joint expo. Perhaps there is a lesson to be learned here.

I would strongly encourage the staff at at the RV Industry Association to work with the staff at RVDA to create a joint convention. It would be the best of both worlds.  RVDA could continue providing exceptional educational programming to thousands of people from thousands of RV dealerships. With that programming, RVIA may offer a reason to keep more dealers at their show on Day Three, or even during fourth day.

Louisville may not be as exciting, glitzy and ritzy as Las Vegas. But, it’s likely a better venue for a true business meeting. Until RVDA gets its hands around the declining participation in Las Vegas, I suspect the association will continue to gamble with their convention. 

When it comes to the formaldehyde issue, it’s hard to know what’s right, what’s wrong, what’s hype and what’s fact. On Monday, the RV Industry Association took the proactive step of bringing the issue to the forefront of industry discussion during its annual membership meeting in Las Vegas.

The association brought in a hired gun to bring manufacturers, dealers and suppliers up to speed about the issue which has garnered media attention to the point some consumers wonder whether they’ll be poisoned in their RVs, as some media outlets have contended. The bottom line is that the media hype is groundless and it is up to us to educate consumers about the formaldehyde fuss.

For the most part, the formaldehyde issue is yet the latest hit job by what Rush Limbaugh calls the drive-by media – reporters acting like gang members who spray bullets into a crowd causing mass panic and hysteria only to calmly drive away unscathed and unnoticed as the gangsters look for their next victims.

Dr. Lee Shull is a professional toxicologist who works as the corporate risk services director for Environmental Resources Management in Sacramento, Calif. He was invited by RVIA to expose the fallacy of the formaldehyde issue. Monday morning, he did an excellent job putting the issue in its proper context. Here are a few bullet points you can use to reassure customers that RVs remain safe.

• Formaldehyde is one of the most naturally occurring organic compounds in the universe
• It is not unusual for people to be exposed to formaldehyde daily through clothing, carpeting, building materials and even food
• It is often used as a disinfectant and antimicrobial solution
• It is fed to livestock
• It is found in soap and cosmetics
• It is used in the food industry to process fish, cheese and juice
• It has been used for 70 years to create exceptionally strong glue that securely bonds one material to another

When wood products are manufactured using glue, virtually all the formaldehyde is consumed in the process. In fact 99 percent of the compound used is chemically bonded into the materials. Less than 1 percent is considered “free formaldehyde” which is released over time as a gas. The news media, on the other hand, frequently suggests that 100 percent of the formaldehyde used in the manufacturing process is available as an “off gas” which is harmful to humans, Dr. Shull said.

Air samples were taken daily on 96 FEMA trailers over a 14-day period. Two groups of trailers were sampled. Group A turned on air conditioners and left the bathroom vent open. Group B shut off the air conditioner, opened the windows and left the vents open. The goal was to see whether the concentration of formaldehyde could be altered below 0.3 parts per million (ppm), the point at which exposure may result in discomfort and irritation.

Group A, the users who shut the windows and recirculated air through the air conditioner, experienced irritating levels of formaldehyde gas 12 of the 14 days. But, Group B, which opened the windows as recommended, recorded less than 0.3 ppm after the fourth day. What a surprise.

Dr. Shull said there were other factors in the Gulf Region contributing to higher formaldehyde levels — factors the drive-by media chose to ignore, including:

• The trailers were recently constructed and it takes time for the 1 percent of free formaldehyde to escape from wood products in order to be off gassed
• The trailers were shut tight due to hot humid weather
• Formaldehyde was also released from nearby rotting wood associated with downed trees and broken homes
• People were also smoking indoors and tobacco products release their own formaldehyde
• Gas cookers were often involved and they, too, produce formaldehyde
• People were also exposed to cleaning agents and personal care products, like cosmetics, which release formaldehyde

Dr. Shull noted the Occupational Safety and Health Administration, Department of Housing and Urban Development, Environmental Protection Agency, the Agency for Toxic Substances and Disease Registry, Consumer Product Safety Commission and World Health Organization all have different standards as to what is and is not an acceptable level of formaldehyde concentration. As expected, the media picks the lowest level of “acceptable” concentration adopted by one of the agencies and portrays that number as undisputed fact.

A total of 28 different epidemiology studies of factors contributing to illness have failed to show a correlation between formaldehyde and any evidence of nasal cancer. Yet the media is all hyped up about the issue because studies have shown that high levels of formaldehyde did cause cancer in laboratory rats. What the media didn’t mention are these inconvenient facts about the study in which rats were exposed to various levels of concentration for six hours a day, five days a week over two years:

• Of the 159 rats exposed at a concentration of 2 ppm, none of the rats contracted cancer
• Of the 153 rats exposed to a concentration of 5.6 ppm, only two rats contracted cancer
• Of the 140 rats exposed to a concentration of 14.3 ppm, 94 of the rodents developed cancer

Remember, the level of human exposure in the tested FEMA trailers was 0.3 ppm — enough to cause irritation, but nothing else, even among sensitive individuals. It was nowhere near the concentration to which the lab rats were exposed. The heart of the controversy, according to Dr. Shull, is that science has clearly demonstrated there is a point at which a dose of formaldehyde causes no observable problems. But government agencies can’t let facts stand in the way of a good regulation. 

You see, because a rat exposed to high levels of formaldehyde can contract cancer, the government assumes there is a one in a million chance that a human could get cancer from the same substance — even at levels 1,800 percent lower than that known to cause cancer. And that assumption forms the basis for regulatory intervention and growing the size of government to protect us all. Whenever we see the government concerned about that special one-in-a-million person, you can bet that scores of attorneys will find thousands of potential victims in our country of 301 million people, of which 8 million use RVs. Just follow the money. 

Last week, Arizona firm Charter Equity released its business plan indicating it intended to purchase RV dealerships in hopes of consolidating them into a nationwide network similar to the one embraced in the auto industry by AutoNation. In fact, Charter Equity, has already acquired its first dealership in California and have another four or so on the hook?

I applaud their effort and their desire to offer RV dealers a business model for succession that doesn’t involve selling out to Affinity Group. In fact, as a publicly traded company, Charter Equity probably has even more financial resources to get the job done than AGI, which must borrow money for its acquisitions at double digit rates.

Yet, I have mixed feelings about yet another attempt to consolidate dealerships. We already have Affinity Group buying up dealerships and renaming them under the FreedomRoads brand so the company can build more Camping World stores. This group is trying to muscle the entire RV industry in two ways. First, by building big box retail stores that offer little in the way of personalized service, but lower prices that reduce margins for everyone. And, second, by removing all vestiges of entrepreneurialism from its dealerships in favor of a management structure with multiple layers of bureaucracy. Someday, will someone explain why this group bought a dealership in Elkhart only to shut it down a few months later?

We also have REDEX and Route 66 consolidating independent dealerships under a common brand that doesn’t involve selling out. These groups provide the framework for increased buying power for the dealers, increased brand recognition and better customer service with their “I’ll take care of your customers, you take care of mine” approach. It’s a voluntary association that still relies on entrepreneurial spirit to move each business forward, and thus the entire network.

The ability of equity companies, like Charter, to offer RV dealers a way out of their business is a plus for the industry. RV dealers work too hard building their businesses to wonder if they will ever be able to enjoy the fruits of their labor. They need a way to sell out without selling out to everything they’ve fought against throughout their careers. Dealers still need the means of escape when they don’t have children willing to take over the business or lack key employees with the entrepreneurial drive necessary to make the sacrifices required to run the business.

Selling out to an equity company may be the avenue they are looking for. It eliminates anxiety for employees who may feel their careers will come to an end with the dealer’s. It gives dealers money upfront to grow their businesses or improve their infrastructure so the dealerships can run more profitably and efficiently in their absence. By tapping into the equity firm’s ability to tap into other people’s money, dealerships can “go public” without being burdened themselves with all the silly paperwork that goes with it.

Consolidation by the right companies may prove to be just the ticket for swinging manufacturer/dealer relationships more toward the dealer – where it belongs. Because equity companies are in business to generate a return on investment for their shareholders, their owners and managers won’t be in the mood for excuses from manufacturers over quality issues and parts delivery problems.

Because dealers are responsible for moving products and generating income the entire RV industry relies upon, as well as creatively coming up with new ways to grow their businesses, equity firms can be a good source for funding growth plans provided the dealers can offer sufficient proof that the investment will yield a satisfactory return.

But, working for an equity company isn’t all wine and roses either. Some equity firms are greedier than Philadelphia loan sharks in their ability to push employees to the brink of physical and emotional exhaustion seeking ways to cut more expenses, develop more income and drop as much money as possible to the bottom line. They’ll set unrealistic expectations for business performance and terminate middle managers who don’t willingly sacrifice their families and marriages to meet those expectations. Even if the business makes more money than it did the previous year, chances are good middle managers will be looking for work if they fall 90 days behind in meeting the double-digit growth expectations the equity firm set for them. Here’s the dirty little secret. When a business owner invites an equity firm into his business, he becomes the middle manager.

Investors are often a fickle bunch, just ask any CEO of a publicly traded company. Equity firms often have a tendency to combine the fickleness of stockholders with the payback demands of paycheck loan companies – you know, those firms that let you borrow money this week and pay it back with your next paycheck for 2,100 percent interest.

Equity firms often force their managers to spend so much time looking for nickels in the dirt that the managers miss the C-notes fluttering overhead. And should a manager net an idea that could yield significant return in five years, equity firms sometimes don’t give the green light because the project with wind up costing money to launch. Dealers looking to sell out to those type of equity companies had better be ready to leave their business within a few years just to maintain their sanity.

I don’t know what kind of business people the folks at Charter Equity are, but I hope to find out soon. Because the right type of equity pumped into the right dealerships at the right time by the right company could set this industry on fire.

As new model year units start appearing on dealer lots, some dealers get anxious about stale units from the previous model year. Often manufacturers will discount a unit to help the dealer move it off the lot. But, apparently, some OEMs take a more desperate approach when things get more desperate.

About a month ago, a manufacturer’s rep alerted me to a problem he believes is highly unscrupulous. I researched the topic and quietly asked a few other sources about the likelihood such a “transaction” could take place. Although it would be highly illegal for an RV dealer to attempt the same trick, apparently manufacturers are able to get it done. And that’s the concept of “rebadging” units.

Here’s how it works.  A dealer in Texas receives a 2007 model in the fall of 2006. The manufacturer’s 2008 models come out mid-year. But, in September when the Texas dealer still can’t sell the 2007 model, he triggers a buy back under the terms of his dealer agreement.  The 2007 model winds up back on the manufacturer’s lot.

Unable to move the model to anyone else and unwilling to discount it further, the manufacturer eventually brings the unit into the shop, pulls off the VIN, reissues the number and presto, a new 2008 model is born. New paperwork is issued and the unit shipped to an unsuspecting dealer.

My source said he has only seen this happen a handful of times in the past three or four years, so I suspect it’s not a widespread problem. However, if most of the units arriving on a dealer’s lot from a particular manufacturer come with X miles on it, and one suddenly shows up with double or triple that number, dealers have every right to question the unit’s validity, especially if the paint schemes, floorplans and interior colors have not changed significantly from the previous year. 

The OEM source said that when dealers question the manufacturer about the higher-than-normal mileage, they are told the unit was driven to some RV shows before it was shipped to the dealer lot.

I googled the concept of vehicle manufacturers rebadging units, converting VIN numbers and the like. There is little information out there about the practice, so I don’t believe it happens that often. Or it simply means that nobody has been caught, yet.

The deception of such a maneuver bothers me. Not only are dealers being deceived, so are the unsuspecting customers. It makes me wonder how such a trick affects warranty issues for interior components. And if a manufacturer is willing to go to that level to sell a unit, what else is the company doing to cut corners?

I can understand why a manufacturer would take such a measure to retain profitability, especially if the OEM has had a tough year or two. But other options also remain including selling it at an auction or online, donating it to charity and writing off the entire cost, or lending it to RVIA for the vehicle loan program for a year, then selling it as a used unit and writing off the depreciation.

My OEM source said he was having a hard time sleeping knowing that this type of deceptive practice was taking place in our industry and in his company. He said the operation to change VIN numbers is done quietly and with the knowledge of senior managers, but the officials harbored a “what they don’t know won’t hurt them” attitude toward the dealers who receive the units and must sell them to others.

It’s a particularly sneaky maneuver if the new dealer’s business is in a state that doesn’t have a buy back rule. Should he be unable to sell the unit due to a defect or whatever, then the dealer must bear the full brunt of writing down the unit just to get it off the lot.

Manufacturers should police themselves against this kind of deception. Doing so would ensure their VIN numbers remain badges of honor, not devices of deception.