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RV industry sees strong, sustainable growth

How much is too much growth for the RV industry? Growth should continue next year, the Recreation Vehicle Industry Association announced at the open of the 50th annual National RV Trade Show in Louisville, Ky.
Justin Leighty
Posted on Nov. 28, 2012 at 12:00 a.m. | Updated on Dec. 4, 2012 at 3:38 p.m.

LOUISVILLE, Ky. — The RV industry should continue to grow next year, though the market is changing, and if it grows more than anticipated, manufacturers and suppliers — most of them in Elkhart County — won’t be able to keep up.

That was the word at the opening of the 50th annual National RV Trade Show Tuesday at the Kentucky Exposition Center.

This year should finish out with about 10 percent growth, and next year should see about 4.5 percent growth, according to James Ashurst of the Recreation Vehicle Industry Association at the kickoff breakfast. “There’s real reason for the industry to be upbeat,” he said.

Later in the day, the RVIA released numbers showing that so far this year, the industry is up 12.4 percent through October after October posted 31 percent gains over the same month in 2011.

Tim Graber, one of many Forest River executives at the show, said the company is running at summer-like production levels to keep up with demand.

While there are concerns for the industry, like gas prices and the impact federal budget problems will have on consumers, Ashurst noted that 8.5 percent of vehicle-owning households in the U.S. own an RV, a steady increase over the decades.

DEALERS OFFER THEIR TAKES

The recession was hard on the industry, and that’s true for the dealers who connect factories with customers. Even since the rebound, the recession left its mark, said Marlena Siverly of Merritt RVs in Carthage, Ill. “Because of the economy and because of everything, everybody wants something for nothing,” she said, with customers wanting units basically at what they cost for the dealership.

Robert Handy of Wilkesboro, N.C., said his family has been in the business for 40 years. Like Siverly, Handy comes to Louisville and to the open houses in Elkhart County in September.

“That’s where I buy. Most of my buying is at the open house,” Handy said. “I come to Louisville to build relationships,” he said, though he noted that manufacturers were offering good incentives to dealers at the Louisville show. “So far I bought about 10 units, and I didn’t plan to buy that much a few hours in,” he said Tuesday afternoon.

As manufacturers make the RVs lighter, customers want them bigger, Handy said. “The bulk of my business is 30-plus foot. Bigger is better. Probably 80 percent of my business is 35-foot” units, he said.

Jarrod Smith came to Louisville for his first time Tuesday, and the Australian RV dealer was amazed looking at “some amazing, big things,” he said. “A lot bigger than we get back in Australia. He looked around inside an $80,000 fifth-wheel complete with a fireplace and ceiling fan (available from many manufacturers) and a 60-inch television. “Youi’re not roughing it when you’ve got this kind of money and the space to put it,” Smith said.

INDUSTRY GROWTH, BUT NOT TOO MUCH

In a private meeting with eTruth.com/The Elkhart Truth following the breakfast, RVIA head Richard Coon said, “We’ve actually been blessed, I think, as an industry. We had that big surge coming out (of the recession), and now it’s been a kind of a slower, steadier growth. That’s good, actually.”

In fact, Coon said he’s worried about too much demand next year. Despite rapid growth over the last couple of years, “there’s more and more pent-up demand,” he said.

If growth continues at or above 10 percent, especially a 15-percent increase, “manufacturing won’t be able to supply enough product. The supply chain will be really tasked to keep up. The slower growth, something in that 4 to 5 to 6 percent area, over the long haul, in my opinion, is a better plan,” Coon said.

INDUSTRY PROSPECTS

While subjected to the economic ups and downs inherent with any product that isn’t a necessity, Coon said the RV industry is unique. The economist who works with the industry “believes there is nothing that would stop this industry,” Coon said. “The entrenchment of the lifestyle in the American public is so deep, it’s so entrenched that whether there’s a war or an economic disaster, this industry’s always going to survive,” he said.

“It’s reflected in 50 years of this annual meeting. I can remember when I got into it in the ’60s,” working for Onan generators, “we as a company treated it as a fad. We thought it would just be something people would want to do and the fad would be over with.

“This industry’s never going away,” he said.

When you adjust for inflation, travel trailers cost no more today than they did decades ago, yet the trailers themselves keep getting nicer and nicer, Coon said.

Andy Baer of Shipshewana-based KZRV said, “We’ve seen interest increase in all price points and sizes.”

Jayco’s Sid Johnson said, “generally speaking the dealers are feeling good about business this year and very upbeat about business next year.”

WORLD MARKETS, WORLD COMPETITION

On the floor of the show, there are a variety of languages used by attendees. That’s an indication of the growing international RV market, according to Coon.

James Ashurst, RVIA vice president, said “we’ve got attendees from all over the globe, Brazil, China, Japan.”

The RVIA will hold its second world conference in January, and while some in the industry aren’t thrilled by the global changes, there’s not much to be done about it.

“We in the United States think we’re the only ones that go, us and Canadians are the only ones who go camping. Not true. Europeans have always had a big marketplace, a lot of people love to caravan, motorhome Europe.

“Now as developing countries are reaching where the middle class is gaining income, like China, South Africa, Australia’s always had a good RV market, but some of these developing countries where the middle class can afford to, having the time and the money to get away with their families.

The lifestyle is universal in this world. I don’t care if you’re South African or in China, you want to take your family and enjoy the country. Russia’s another place, Brazil’s another place where it’s becoming more and more popular.”

He said the United States has the biggest RV industry, “we’re looked at as leaders in the industry.”

Showing other countries how it’s done is something the industry association is interested in. “Trying to get our manufacturers in Elkhart and other places to pay attention to the rest of the world is an important challenge in the next decade. It’s not just a U.S. market or a North American market.

“Some of these markets in a few years could be much, much bigger than ours because they have a lot more people and more money,” Coon said.

RVIA MARKETING

The RVIA has seen success with their new “Away” campaign, and they plan to continue with that effort in the coming year, said Ashurst.

They will also be a push on marketing the family-centric RV lifestyle to the U.S. Hispanic market, which has responded favorably to the advertising so far, he said.

ON DISPLAY

There’s a huge amount of RVs on display, from huge motorhomes to tiny trailers with just enough room for a bed and a kitchen beneath a hatch in the back.

The RV/MH Hall of Fame has a booth, and Elkhart County RV makers bracket each end of the huge show while local RV makers and suppliers fill much of the space in between.

The show fills the entire center, taking up an estimated 800,000 square feet.



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