Recreational Vehicle Dealers

SIC 5561

Companies in this industry

Industry report:

This industry includes establishments primarily engaged in the retail sale of new and used motor homes, recreational trailers, and campers (pickup coaches). Establishments primarily engaged in the retail sale of mobile homes are classified in SIC 5271: Mobile Home Dealers, and those selling utility trailers are classified in SIC 5599: Automotive Dealers, Not Elsewhere Classified.

Industry Snapshot

In 2009, motor homes, travel trailers, and campers with a total value of $7.5 billion were shipped from manufacturers to retailers, just one-half of the $15.74 billion recorded in 2006. In 2009, according to industry statistic, there were 3,907 establishments engaged in the retail sale of new and used motor homes, recreational trailers, and campers (pickup coaches). They employed some 31,847 people. The majority of the dealers were small, with more than one-half employing fewer than five people and more than three-fourths employing less than 10 people.

Recreational vehicle dealers represented the largest sector of the industry, with 1,916 establishments, at 49 percent of the market. Recreational vehicle parts and accessories numbered 578 businesses and represented about 14.8 percent of the market. Motor home dealers numbered 280 establishments. The remaining sectors include camper and travel trailer dealers, campers (pickup coaches) for mounting on trucks, and travel trailers (automobile, new and used). States with the majority of recreational dealers were California, Florida, Michigan, Pennsylvania, and Texas. Combined, they shared roughly one-third of the market.

Retailers in this industry sell new and used recreational vehicles ranging in size from pop-up camper trailers to large, luxury motor homes. The prices for these vehicles range from around $2,000 for a new camper trailer to more than $100,000 for some motor home models. In addition to new and used vehicles, the 3,000 dealers nationwide sell parts and accessories to accompany the vehicles and trailers, as well as extended warranties and service contracts. Most dealers also operate repair centers to service the vehicles and trailers they sell. Some dealers supplement the sales operation by renting recreational vehicles on a short-term basis. Other dealers have taken on lines of related recreational products like snowmobiles to try to balance out the slightly seasonal nature of the business.

The industry is dominated by smaller dealers who own single locations. However, there is a small but growing trend toward multiple location dealers, similar to that seen among dealers of new and used automobiles. Recreational vehicle dealers are more commonplace in states traditionally known as being recreation or retirement destinations, such as California, Texas, Michigan, and Florida.

The relative health of the industry is closely tied to the health of the national economy. Because of this, the fortunes of retailers of new and used recreational vehicles across the country have risen and fallen with national economic cycles. During the late 2000s, the industry was severely negatively impacted by a deep recession that cut deep into RV sales.

Organization and Structure

The sale of new and used recreational vehicles is not a purely regional industry. New and used recreational vehicle dealers are spread across the country, although areas that attract seasonal or tourist business have greater numbers of dealerships.

The dealers in this industry do not rely on exclusive franchises from manufacturers to carry and sell manufacturers' goods. The dealers operate on nonexclusive sales contracts, although some dealers do carry only one brand of product. While there are a large number of manufacturers of recreational vehicles, only a few produce the bulk of product sold by dealers. The various brands produced by the public company Fleetwood Enterprises (Coleman, Pace Arrow, Southwind, Cambria, Limited, Jamboree, Tioga) of Riverside, California, accounted for about 37 percent of the sales made by dealers in the industry. Fleetwood's sales in 2008 totaled $1.66 billion, and the company employed 6,400 workers. Other manufacturers like Winnebago, Jayco, Coachman, and Thor also provided dealers with both vehicles and parts and accessories.

Dealers sell a wide array of products with hopes of filling as many economic or recreational needs as possible. The smallest product sold is a camping trailer with collapsible sidewalls that fold for towing. Truck campers are designed to be loaded onto the bed or chassis of a truck and are designed to serve as temporary living quarters. Van conversions, a relatively new presence on dealers' lots, were the largest segment of the recreational vehicle market in 1998, with 148,600 units shipped to dealers for resale to consumers. Travel trailers, typically between 12 and 35 feet in length, made up the second-largest segment of the recreational vehicle market. Self-contained motor home units, pickup truck conversions, and sport-utility vehicle conversions also were popular.

According to RVIA, 33 percent of dealers have sales between $1.5 and $3 million per year. Another 29 percent of the dealers have sales between $3 and $5 million annually, while 22 percent post annual sales of $5 to $10 million. Only 7 percent sell more than $10 million of vehicles, accessories, and repairs; 9 percent of the dealers in the industry had less than $1.5 million in sales.

Background and Development

Even prior to the introduction of the automobile, travelers hooked trailers to their horse-drawn carriages in order to carry extra gear that would make long trips more endurable. However, with the growth of motor travel, the need for easily accessible eating and sleeping facilities grew. According to Carlton Edwards's Homes for Travel and Living: The History and Development of the Recreational Vehicle and Mobile Home Industry, the first tent trailers were made by individuals who tired of setting up and taking down their camping gear with every stop. In 1926, the Norwich, New York-based Chenango Camp Trailer Company started up the first production line dedicated to the manufacture of recreational vehicles. By the end of the decade, a handful of entrepreneurs around the country were engaged in the production of tent campers and trailers.

The first manufacturers of trailers and motor homes sold directly to the consumer, primarily through word of mouth and referrals. As companies went into production on a larger scale, they set up regional distributorships. Distributors were responsible for selling the product by establishing dealer networks and servicing dealer accounts. Early dealers of recreational vehicles typically were already involved in the sale of automobiles or had some experience servicing them through gas/service stations. Many dealerships sold automobiles and recreational vehicles side-by-side.

By the late 1940s, regional distributorships were discontinued after manufacturers established direct relationships with their dealers. Vehicle dealers enjoyed the freedom to choose the product line they wished to carry from all those offered by manufacturers. The dealer gained the authority to discontinue lines when they weren't profitable or when the brands carried had too much product overlap. This arrangement also allowed dealers to add new lines in order to augment the selection and variety of vehicles offered.

Dealers were rocked in the 1970s by the oil embargo, recessionary conditions, and the credit crunch of the 1970s. However, sales bounced back in the early 1980s, and by the mid-1980s business was booming for manufacturers like Winnebago and Fleetwood and the dealers who sold their brands. In 1988, approximately 427,000 units were shipped to dealers. According to the Recreational Vehicle Industry Association (RVIA), manufacturers shipped 292,700 new units to dealers in 1998. The retail value of these units was $8.36 billion. In addition to new units, dealers also sell used vehicles, which account for some 30 percent of unit sales income.

Since the early days of the industry, dealers, along with manufacturers, have recognized the importance of camping and motor home parks to their fortunes. Availability and access to the parks was vital to the industry. The continued presence and popularity of national parks and other recreation areas have thus been a vital factor in recreational vehicle dealers' success. National parks had more than 60 million visitors in the mid-1990s, with 3.4 million overnight stays in recreation vehicles.

The Recreation Vehicle Dealers Association (RVDA) noted that, in 1995, the industry showed a 4.7 percent decrease in units shipped. This was expected, as shipments had been increasing since 1991, and reductions often occur after three or four years of increases. Even so, demand for new units in 1995 was the second-highest total in at least a decade; the demand has risen since then. The retail value of those units actually hit an all-time high.

RV manufacturers offer a variety of high-tech amenities, which add to comfort (and price). According to RVIA, new technologies include moving walls that expand the RV's interior (sometimes doubling the available floor space) at the touch of a button; compact direct broadcast satellite antennas; global positioning systems to help travelers track their exact location; WebTV, which allows travelers access to the Internet; and space-saving appliances.

An Internet survey conducted by RV News offered encouraging results for the industry. Seventy-two percent of visitors to the RV American Web site already owned an RV, and 75 percent said they intended to purchase an RV within the next two years. Eighty percent were searching for parts and accessories; 75 percent were looking for dealers; 72 percent needed service facilities; and 68 percent sought information on new RVs.

About one household in 10 owned a recreation vehicle in 1996. Younger buyers tended to favor folding camper trailers and truck campers, while older buyers preferred motor homes and van campers. In the 1990s, the industry began courting baby boomers, as that cohort moved into the prime RV buying age bracket of 45 to 54.

The total number of dealers climbed to 4,396 in 2003, according to D & B Sales & Marketing Solutions. In addition, the average sales per establishment were approximately $2.80 million. The RVDA estimated that recreational vehicle dealers, as well as the rental market, generated $15.75 billion annually.

The total shipment value of motor homes, travel trailers, and campers manufactured in 2006 was $15.74 billion, reflecting a small increase over $15.34 billion in 2005, according to the U.S. Census Bureau. In 2003, total RV shipments, which include motor homes, travel trailers, fifth-wheel travel trailers, truck campers, and folding camping trailers, numbered 320,800 units. The RVIA reported that this was a 3.2 percent increase over 2002. However, most impressive was the 21 percent increase from 2001 to 2002. According to a study conducted by the University of Michigan in 2001, the projected number was expected to increase 15 percent from 2001 through to 2010. These results were based on the aging of the baby boomers. The survey also concluded that there were 7.2 million recreational vehicles scattered over the highways in the United States, or some 7.8 million households. Travel trailers were the most popular and accounted for the largest shipment, valued at $147 billion. Fifth wheels generated $67.4 billion, folding camper trailers were valued at $35.7 billion, truck campers retailed $8.8 billion, and motor homes represented $61.9 billion.

Current Conditions

After reaching sales figures in the mid-2000s on line with the heydays of the mid-1970s, the RV market collapsed during the final years of the 2000s as the United States entered a recession and consumers cut their spending. RVIA reported unit sales of 370,100, 384,400, and 390,500 units in 2004, 2005, and 2006, respectively. These sales translated into record-high revenues of $14.7 billion, $14.4 billion, and $14.5 billion, respectively.

In 2007 unit (dollar) sales declined by nearly 10 percent to 353,400 ($14.5 billion). In the following year, gas prices soared to over $4 per gallon, the housing market collapsed, causing a credit crisis, and the U.S. economy sunk into a recession. As a result, sales dropped 33 percent in 2008 and another 31 percent in 2009. Specifically, unit (dollar) sales were 237,000 units ($8.76 billion) in 2008 and 165,700 units ($5.15 billion) in 2009.

Despite the weak performance during the late 2000s, the long-term outlook for the industry was positive as millions of Baby Boomers began to age into retirement. According to the U.S. Census Bureau, at the beginning of 2011, 57 million Americans were between the ages of 50 and 64 years old--38 percent more than in 2000. The RVIA suggests that 10 percent of vehicle-owning consumers in that age group also own an RV of some type. The largest segment of RV owners are in the 35 to 54 year old age range; approximately 11,000 Americans turn 50 every day. Interestingly, the fastest growing segment of the industry are the youngest buyers, in the 18- to 34-year-old age range. These younger buys are attracted to sports-utility RVs, camping, and activities-related RVing.

As the U.S. economy righted itself, sales began to return to the industry. Pent-up demand resulted in a sharp increase in units sold in 2010. Estimated unit sales were up nearly 42 percent from 2009 and roughly on par with unit sales recorded in 2008. Although a significant increase from the previous year, unit sales in 2010 were still far off pace from the 25-year highs recorded during the mid-2000s as the industry continued to struggle with uncertainty in the economy, high unemployment, and tight credit. According to a report issued by the University of Michigan through the RVIA, projected growth for 2011 was 3.9 percent.

Industry Leaders

Monaco RV (formerly Monaco Coach), of Coburg, Oregon, is a leading maker of diesel-powered RVs. The firm makes both motorized and towables, which are distributed through a national network of dealers. After filing for bankruptcy protection, the firm was purchased by Navistar International, Inc., in 2009 and now operates as a subsidiary of that company.

Thor Industries, of Jackson Center, Ohio, was another industry leader with $2.28 billion in revenues in 2009. Thor produces an array of RVS ranging from decked-out RVs to travel trailers under the brands Airstream and Dutchmen. It also rents RVs in a joint venture with Cruise America. The company also manufactures buses.

Forest River, Inc., of Elkhart, Indiana, manufactures RVs including motor homes, fifth wheel, travel trailers, and pop-ups. The firm also makes buses, boats, and modular homes and offices. It operates as a subsidiary of the conglomerate Berkshire Hathaway.

Winnebago Industries, Inc., of Forest City, Iowa, focuses its business solely on making RVs. Brand names Winnebago, Itasca, and ERA brand range in price from $69,000 to $330,000. The publicly traded firm reported sales of $449.5 million in 2009.

Workforce

Most dealerships within the RV retail industry are relatively small operations, employing a small number of people. The RVDA provides online business and technical training, certification preparation. The organization also sponsors on-site events for dealers, sales, service, RV service technician certification, parts, finance and insurance, and rental.

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