While talking heads like John McCain bob and wobble about the state of our economy, for the RV industry there is no doubt. It's recession time. Forest City, Iowa's famous Winnebego has seen their earnings fall by 67 percent this past quarter, after ten years of straight growth. The obvious reason not to buy a giant motor home: gas prices. As we saw yesterday, prices everywhere are up, up, up. Especially diesel. What kind of mileage does a typical RV get? Gas-powered homes-on-wheels manage about five mpg, whereas the diesel rigs average nine mpg. More troubling though, is the prospect that people aren't buying RVs because they can no longer afford big-ticket items. Especially as the typical RV owner is in the sweet-spot of the disposable income range: empty nest, soon to be retired boomers, aged 55 – 60. I mean, if not them, who? Cutting back on land yacht road trips because of a temporary spike in fuel prices is one thing. Not buying the behemoths in the first place is another. (As is buying your dream RV and then having a bank repossess it.) Bottom line: RVs might just be gigantic dead canaries in a very toxic coal mine.
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So true. In 5 1/2 years of RVing (2 years snow-birding, 3 1/2 years Full-timing) we’ve experienced a diesel price increase of well over 100%. Frankly, I don’t know how over-the-road truckers are making it these days.
We bought our rig 6 years ago when I retired. I can honestly say, if I were retiring today, we would not be in the market for a motor home.
Starting about 2 years ago, motor homes started appearing EVERYWHERE around here on the side of the road with FOR SALE signs in the windshield. That was in response to a spike in fuel cost ($2.50/gallon?!?! Are you kidding me?!?!?)
Now people can’t afford the fuel or the payments. Not just RV’s. The luxury boat market has collapsed as well. Was talking to a guy this weekend who got a $50,000 rebate on a 32 foot SeaRay. Insane. Nobody is buying.
I think 2005 and 2006 were the best years ever for the RV industry so this kind of down turn should be expected. I’d guess the makers of lightweight trailers are doing OK.
It’s been hard to find smaller (under 26 feet) travel trailers lately, maybe this will bring some on the market.
Personally, I blame Top Gear.
I mean, sure, $4 diesel, high interest rates and a tanking economy might have a *little* to do with it, but I think the trouble really started when James May showed the world how RV’s disintegrate while going around an oval track. Even with Captain Slow at the helm, those plywood boxes don’t hold up well.
And speaking of helms, it probably didn’t help the industry when Hamster’s camper Vanagon-slash-canal tugboat nose-dived to the bottom of the English Channel, either.
If I were Winnebago, I’d really hate those guys.
Relative to the actual cost of the rig, insurance, and other supplies, I would think these people would just spend less time on the road and more time in camps. Just shift the mix a little.
I guess most RVers are still the weekenders, though–more affected by fuel prices than fulltimers or partial fulltimers.
In other words, I’d be curious to see a breakout in sales for buyers intending on fulltime usage. I bet it’s a lot flatter than the overall downtrend.
It’s hard to determine the psychological efect of rising fuel prices, but I think the overwhelming reason for the huge decline in RV sales has to be due to a general lack of disposable income. In my mind, I categorize them right up there with boats of the ocean going variety and small prop planes. It’s really hard to justify laying down $100k+ for something that is basically a toy when your home has lost 10%, 20%, or more of its “value” during the past two years.
dancote
Trucking rates are almost universally a two part tariff. There is the rate and the fuel surcharge that floats daily or weekly and is pegged to the price of diesel.
A typical rate for truckload service with a 53′ trailer would be $1.80/mile plus 30% fuel surcharge.
Back in 2001-2002 when the economy tanked there was no fuel surcharge and a lot of trucking companies went under. Ever since then it is pretty much a pass through cost.
What you have been hearing about in the press lately is the public whining of Independents who don’t have a fuel surcharge.
I notice very few RV’s on the interstate these days.
Can someone please explain RVs? I don’t get it. I can understand retired folks who tour the country for months or even years, but they seem to be a small percentage of the people I see with motorhomes.
I do a lot of cycling, and one feature of new mcmansion developments is that parked next to every other house is a big ass RV, so big they often drop my jaw when I see their cartoonish dimensions. Judging by the ages of the children in these neighborhoods, the parents must be in their late twenties to mid-thirties. They have real jobs. They cannot be using their RVs for more than a few weekends and perhaps a week long vacation per year.
Financially, it cannot make sense to own a motorhome the size of a city bus. For a lot less money, they could stay in nice hotels. They could buy top end backpacking gear instead. I assume you can rent an RV for the very few times a typical family would actually put one to legitimate use.
I cannot help but think that they are a giant waste of money.
You see, the RV’s belong to the grandparents :)
We toured a high-end RV manufacturer’s operation recently in Indiana. For these things, it’s still true that the fuel cost is only a small fraction of the purchase price. But they’re still hurting big time, cut down to 3 days a week. There’s definitely more to it than the price of fuel. I think Lumbergh’s right – it’s disposable income and confidence in the future that’s killing them.
10000 miles a year in a diesel motorhome divided by 9mpg is about 1100 gallons. At 3.50 a gal that’s under 4k per year. Compared to the depreciation cost or payments on a 100k motorhome, that’s peanuts.
The smarter RV owners get a mid-80s to early-90s Toyota-based motorhome.
http://www.toyotamotorhomes.com/
http://groups.yahoo.com/group/toyota-campers/
They rarely cost over $10k to purchase and they typically get 14-17 mpg.
One benefit of an RV over say a home, is that it is harder to repossess. fresh coat of paint, remove the license while parked, and creditors will ignore you and go for the sitting duck homeowner.
I’ve been wondering when the fuel price spiral was going to tank RV sales.
You only need a fraction of the owners of current lightly used units to pull the plug and put theirs on the market in order to really tank things for the already falling new RV sales.
I remember the gas crunches of the 1970s very well. At that time GM and FMC were both making some of the best built RVs in the industry, and they bailed in short order. The entire RV industry went into a tailspin then. In the 1990s people pretty much forgot what it had been like …. and now here we go again!
I guess the very rich dont feel it. Cessna is increasing light aircraft production and introducing new models. This week average fuel price for aviation gasoline was $4.97, jet fuel $5.19.
I have to wonder if it really is the price of gas that is effecting the RV industry. I think that perhaps the downturn in the real estate and credit markets would have a bigger influence. Reason being that many mid to high end RV’s are bought by retirees and empty nesters that just sold the house to pay for it. If you cannot sell the house, or sell it for enough to clear the mortgage(s) and have enough left to put towards that nice big Class A RV then you’re out of the market or you’re looking at something used or cheaper. And with credit being tightened, fewer people are going to get approved on the loans for these things. The MSNBC article seems to point this out as well.
The other that there is more than one segment of the RV industry. While the market for class A and class C RV’s may be in the tank, the last I heard was that the market for towable RV’s is up and growing. More companies are getting into the lightweight towable market, building models that can be towed by CUV’s and cars. The market for pop-up campers is thriving as well, since if you own a full-size SUV you can generally tow the biggest pop-up made today with no significant hit to your fuel mileage. Most mileage reports from people towing the big highwall pop-ups with full-sized SUVs come in at around 15mpg because the camper is still below the tow vehicle roofline, whereas towing a travel trailer with the same usually results in a 5mpg hit because of the height. They’re not unlike dragging a barn door down the highway.
But like was eluded to earlier, the cost of fuel is not that big of a factor in the financials of RV ownership. Depreciation is far greater.
At any rate it looks like there will be some sweet deals in used motorhomes coming.
The bigger they come, the harder they fall! And it’s no bad thing; these slow-rolling homes seem like the worst of both worlds, too large to drive and too small to live in. Begone with ’em, I say.
But I’m keeping mine, for the moment. It’s a 16-foot Scamp, which to the uninitiated resembles a fiberglass egg on wheels. Inside, it’s not much more than shelter, with four almost-comfy beds and a gas cooktop. Other luxuries are available, but we’re keeping investment and weight low as we can. At one ton even, it’s towed easily by my Forester. Eighteen mpg is our usual result when towing.
Small trailers like these remain in high demand. They’re made only by a handful of US and Canadian manufacturers, who do little advertising. You won’t see them on dealers’ lots, since every one is presold, usually around $10K and up.
They’re a slick solution to the family camping problem I faced. My wife hated sleeping on the ground. I could have bought cots, thicker air mattresses and other portable camp luxuries, but the car was already packed full. My choices were three: buy a bigger car, or buy a trailer, or never camp with the family. My marriage is stronger today because I avoided Option 3, and my total family fuel economy average is a lot better off because I avoided Option 1. And I like the Scamp far better than a pop-up tent trailer. It’s warmer (or cooler, as necessary), durable with little maintenance, and far handier. It takes me just a few minutes to hitch up and go, and only seconds to stop by the roadside and make a meal.
Not that I go out in it all that often. At these prices, even 18 mpg is hard to accept!