What Does The Future Of The RV Industry Look Like?

by Alan Wiener

Editors Note: This is the third in a series of 3 articles I originally wrote in 2009 about the crisis that the RV industry was experiencing.

If fuel prices keep increasing; the immediate future of the RV Industry is not looking bright. I am afraid there may still be a few more RV Manufacturers going out of business. Once the dust settles and fuel prices go down, the RV Industry will start to slowly grow once again and yes, people will start to buy RVs again.

I am going to use the example of the Dot Com Bubble burst of 2000 and 2001 to try to explain what has happened to and what is going to happen to the RV Industry. You are probably asking yourself "What the heck does the Dot Com Bubble Burst have to do with the RV Industry?" stick with me here it will all make sense at the end (I hope).

In the late 90s more and more people were getting on the internet. Some retailers and entrepreneurs saw the internet as an opportunity to start selling tons of merchandise. So they started up a bunch of websites selling everything from pet supplies to music CDs. The philosophy of some of these dot-coms was "If we build a website people will come and buy all of our stuff". So the dot-coms starting borrowing millions of dollars from the banks and went public with their stock so they could build their websites. The stocks kept soaring and the dot-coms kept borrowing more and more money to add on to their websites and advertise them. There was only one problem, a lot of these dot-coms were making no money at all.

In fact; there became a glut of dot-coms on the internet all spending millions on their websites to sell their stuff. These dot-coms knew they couldn't fail, after all, it was the internet and everybody was making millions of dollars on the internet weren't they?

Well, all the sales didn't come in as expected, in fact, some of these dot-coms never made a profit the whole time that they were in business. Now the banks were getting worried about some of these dot-coms because loan payments were not being made on a timely basis and some of the banks started to call in some of the loans. Now the shareholders were getting worried because of lack of sales and profits, defaulted loans, bad business practices, etc and they started selling off their stock like crazy and stock prices plummeted and a lot of the dot-coms went belly up (out of business).

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Here are just a few of the dot-coms that went out of business, Beyond.com, Boo.com, Pets.com, KOZMO.com, eToys.com, eXcite.com and so on and so on. But wait if you search the internet you can still find some of these websites, "What's up with that?". Well, some of the other dot-coms that did not go out of business bought their names and are using them.

Now there were some survivors of the Dot-Com Bubble Burst such as eBay.com, Amazon.com, Travelocity.com and Yahoo.com to name a few. It took these survivors awhile to get back on track, but they are now flourishing.

So what went wrong? Rather than trying to figure out what the consumer really wanted, the dot-coms adopted the philosophy of "if we build it they will come" and if they don't come, we will just borrow more money and make our website bigger and advertise more until they do come. It never dawned on the dot-coms that not all of the internet visitors were ready to buy stuff online, because they were not sure how secure their transactions would be (there was no consumer confidence).

These dot-coms also ignored the fact that were lots of other websites that were selling the same stuff they were and that these other websites actually understood what the internet consumer wanted. These other websites were doing a better job at customer service, etc.
These big dot-coms just ignored the fact that there were too many websites selling the same stuff and ended up going out of business.

Does any of the above sound familiar? During the 90s and into the 2000s many of the RV manufacturers increased production and opened new factories as a result of strong RV Sales. Of course, a lot of the manufacturers had to get loans to continue their expansions. According to the Recreational Vehicle Industry Association, RV sales peaked in 2006 at about 390,000 vehicles. Some of the RV Manufacturers were caught by surprise when RV sales started to decline in 2007.

Then came the volatile fuel prices which caused a lot of potential buyers to steer clear of buying "fuel-guzzling" RVs. To be honest, there really has not been a major improvement in fuel mileage in the motorized RV category for the past two decades. Now, if the fuel prices were not enough to hurt the RV Industry, the housing loan debacle sure was. Lending institutions were being hit hard by subprime loan defaults. So their reaction was to tighten up the loan market making it harder for someone to buy a "luxury item" such as an RV.

Then to put the final nail in the coffin of the RV Industry the stock market decided to make a "major price correction" in other words the stock market plummeted. This price correction affected a lot of "baby boomers" financially. Since baby boomers are the major buyers of RVs it also affected the RV Industry. Because the RV industry was too slow to react to the economic downturn, they produced too many RVs that were not selling, creating the new RV glut that we have now. So the RV Industry has gone from "feast to famine" in 2 1/2 years.

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So, as you see there are quite a few similarities between the Dot-Com Bubble Burst of 2000 and 2001 and the RV Bubble Burst of 2008 and 2009. Just like the Dot-Com Bubble Burst, there will be survivors of the RV Bubble Burst. The number of RV Manufacturers that survive is yet to be determined as we are in the middle of the RV Bubble Burst. But there will be survivors.

What will happen to the RV Industry in the future is going to be in the hands of the surviving RV Manufacturers. All of the surviving RV Manufacturers by default will have a larger market share of RV sales then they had Prior to the bubble burst. Some will come back quicker than others. Some may even start to look at the future and build some innovative motorized RVs that are far more fuel-efficient, while still providing the luxuries that RVers expect. Hopefully, all of them will have learned from this experience; that they need to keep their ears to the ground and have contingency plans in place on how to react quickly to changes in the RV marketplace.

What can RV consumers expect? Once the glut of RVs is sold off, you can expect fewer RVs to choose from. You will not have a selection of unlimited floor plans to choose from. Depending on the type of RV you are looking at you may find that there are only two or three companies making them. You may also find some very innovative RVs to choose from made by either existing RV Manufacturers or brand new RV Manufacturers who are trying to make a name for themselves. Either way, the RV Industry will still be around, hopefully, a little bit wiser from their experience over the past couple of years.

RVing is not dead, it is just trying to catch its breath. The long term future of RVing will be bright as long as the same mistakes are not repeated.

Editors Note: What do you think? Give us your opinion by clicking on the "Click Here To Post Comments" link located near the bottom of this page.

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RVing future
by: ED

Want to thank JAYCO for quick responce to repairing my new 29' RV trailer in 2015. Without there customer service view we are enjoying it.

But JAYCO lets start using better material in the manufacturing process that will last. I>E> slideouts are to heavy and would be a industry first if they could improve it.

With big V8 engines not having a bright future we better get working on treaming the weight now or RVing may be a thing of the pass.

Ed Ragin

Price Point
by: Anonymous

All the pricing on Diesel pushers is inconsistent!
I'm looking at purchasing 40Ft+/- unit but none of the dealers will give you an price unless you commit to a deal. what is up with that? This is a huge investment for anybody, but they still play this game.

Motorhome industry consolidation
by: Jerry Segers

Over the years, I have owned several motorhomes, and I am currently considering another purchase so I rented a new Class C. I was astonished at the poor milage and coach quality in what I considered a mid weight class C on a Ford Chassis with the V10 engine.

This caused me to take a close look at the motorhome industry only to find there has been little innovation since the Lifetime box on a Dodge truck chassis from the 70's. Many seem poorly made, and have so many frills the chassis is overloaded before you add people, food and other gear. I read reports of engines that need to be rebuilt after 70,000 miles and transmissions that fails after 60,000. I read reports of failure after failure in new vehicles within weeks of delivery. This is no way to run a railroad nor any other industry.

On the bright side there seem to be one good light weight chassis, the Mercedes Sprinter. It gets reasonable milage and drives well, but as I said it is a lightweight chassis which means either a small motorhome or an overloaded chassis.

In the middle I found the Ford chassis with a V10 engine. Reasonable performance, but in my view terrible fuel economy and heat problems in the cab. The engine hump on the passenger side got so hot it burned your leg.

The high end seems to have a couple of chassis, the Spartan and the Freightliner. Both of these are reliable long haul machines, but priced out of reach for many people. And some people just don't want a rig that large.

While I know there are other chassis available, these are the ones I have seen most frequently as I researched my new purchase. This is a terrible state of affairs as far as I can tell. Are these really the only manufacturers of trucks? I hope not. If not then where are all the others? And why, oh why, do all the remaining coach manufacturers think they can sustain all the brands they purchased during the recent consolidation. Does Thor think they need 20 brands? Look at their web site. And Winnebago, with 12 brands and multiple styles per brand, are they really different or are they just different color schemes on the same package? There are companies, these are just the ones that seemed most egregious when I looked.

With all this hardware, I still can not find a reasonable mid sized unit. For this reason, I think there are still some corrections coming in the industry, but it will not be because of the fuel cost as many imagine. The US is about to become a petroleum exporting nation again with all the new oil in Texas and north Colorado. This should keep the fuel prices stable or falling.

What is going to cause the industry shake up is customer service. With social media and the internet, companies that provide poor service after the sale and sell products that cause problem will be left in the dust while some new kid on the block with good service and a better product will own the market.

Just my opinion. Perhaps your will be different.

Needs to return
by: George

We bought our Hi-Lo 25ft. Classic new in 06. We bought it due to the advertised MPG savings. Their claim of excellent fuel economy pulling a Hi-Lo has proven to be true. We are able to achieve 75% or our Grand Marquis's 24 mpg during Interstate driving. It's not fancy, just excellent campgrounds living. We feel it is the RV of the "High Gas Prices" future.

gas prices
by: Nancy / FL

I didn't spend my career saving for my RV and dreaming about traveling when I retired, just to be put off by rising gas prices. I will go with the flow, even if I have to get a temporary job while I travel. I am sad that our country is so dependent on foreign oil, but it is what it is, sulking & staying home won't change it. I will do as much RVing as I can, maybe take some shorter trips!

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