Rougher Road for RVs : After enjoying years of growth, the industry is prepared for a slowdown but counting on a rebound in 1990.
When Ron and Marilyn Strong take to the open road to get away from it all, they don’t necessarily leave everything behind.
Inside their aluminum-clad, 26-foot-long motor home, the Culver City couple enjoy the use of a built-in microwave oven and color television during weekend jaunts to San Diego and Santa Barbara. The $40,000 coach even has a barbecue that flips out from an exterior wall so the Strongs can grill their favorite steaks.
“This is roughing it--smoothly,” said Strong, 56, a body shop manager who plans to trade up to an even bigger, $54,000 motor home with much more storage.
The Strongs are among the legions of Americans who crisscross the country in nearly 8.5 million motor homes and travel trailers. After several years of slow but steady growth, the industry is preparing for a decline this year in the wake of a possible economic slowdown.
“I think everybody has been a little leery of a recession,” said John DeWolf, economist for the Recreational Vehicle Assn., which predicts that recreation vehicle shipments will fall off about 6% this year before rebounding in 1990. “But they are happy to see the slowdown is not any worse than it is.”
News of a slowdown comes after the industry saw sales in 1988 reach their highest levels in a decade. In fact, the recreational vehicle division of Riverside-based Fleetwood Enterprises, the nation’s largest motor home maker, reported record-high sales of $1.05 billion for its 1989 fiscal year ended April 30.
Fleetwood, which also makes manufactured housing, is headquartered on a 40-acre corporate complex that serves as the nerve center for the company’s 10,000 employees across the nation.
The complex is also home to Fleetwood’s “skunk works,” where designers use computers and clay models to create future generations of motor homes. In sheds off limits to visitors, full-scale mock-ups of these models are inspected and tested again by company executives. Most will never go into production.
To stay in touch with customers, Fleetwood’s top managers drive motor homes. While driving his Pace Arrow motor home across Michigan in 1985, Fleetwood Chairman John C. Crean came up with the idea of boosting storage by adding a 12-inch-high space between the floor and the vehicle’s chassis. The idea lead to the creation of the Bounder model, which has proved to be one of the company’s fastest-growing lines.
Despite popular new models and record sales, Fleetwood’s stock price fell nearly 10% in one day last month after the company reported sluggish sales of travel trailers, which are hitched to trucks or other vehicles. Analysts lowered earnings estimates for Fleetwood, which will still see profits grow from the previous year.
Buyers are “being more discretionary about what they are willing to spend on a trailer,” said James V. Sheldon, marketing director at Fleetwood. But Sheldon notes that the more expensive lines of self-propelled motor homes, selling for $30,000 and up, are still doing quite well.
In fact, predictions of a slowdown come as motor homes have become more expensive and gadget-loaded than ever. Affluent retirees are driving off sales lots in $100,000 motor homes complete with videocassette recorders and interiors finished with oak, brass and velvet. Some 40-foot homes even boast closed-circuit television systems so the driver can get a clear picture of what’s behind the vehicle.
“They are not looking for the smallest, most economical motor home,” said Sheldon of Fleetwood Enterprises. “People want the amenities that they enjoy at home. There is not a big motor home that does not contain a microwave.”
Must Have ‘Pizazz’
Merv Jones, general sales manager at National RV in Burbank, says customers are looking for two main things. “They are looking at a floor plan that works for them, and it has to have a little pizazz--it has to look nice.”
And the size of many of these lumbering homes on wheels doesn’t faze many buyers, despite quirks. “They forget about the height,” Sheldon said of novice drivers. “You are not taking this through a fast-food drive-through without paying dearly.”
Once they hit the road, many motor home enthusiasts travel in groups on organized outings. The Strongs’ Elks Lodge, for example, organized weekend trips every month. RV campsites, complete with utility hookups and even swimming pools, rent for as little as $7 a night.
During a recent outing to San Diego, the Strongs took shuttle buses from the campsite to Tijuana. “It just helps you get away from the hassles,” said Don Strong of the outings. “It’s a break for us.”
Although the industry has sought to woo younger buyers, most motor home customers tend to be in their 50s and retired. In fact, older customers tend to buy the larger and more lavish motor homes.
“The retiree market is still very important,” said Les Werkstell, an industry analyst at First Manhattan Co.
Younger consumers are “paying off a home or putting kids through school,” said Sheldon. “The growth will continue to come from retired and semi-retired buyers, those empty nesters who are moderately affluent.”
Traditional Tastes
Affluent retirees are less likely to be affected by a rise in interest rates or a hike in gasoline prices. “People who spend $50,000 for a motor home don’t worry about another 20 cents a gallon,” Werkstell said.
It’s a traditional market with traditional tastes. Although baby boomers might have taken to sleek aerodynamic shapes in automobiles, older motor home buyers are quite fond of the traditional, boxy motor home.
“The average RV buyer is very conservative,” said Sheldon. “We used to have swoops and curved backs,” he said of some previous models that failed to win buyers over. “They want storage and a functional floor plan.”
The top-of-the-line, self-propelled motor home has emerged as a top seller after the industry suffered a crushing blow in the late 1970s and early 1980s, when gas shortages and a recession played havoc with sales. Sales dropped from an all-time high of more than 441,000 in 1976 to nearly 100,000 four years later.
Bright Future
“The industry got a double whammy,” Werkstell said. “They are not back to where they were in the late 1970s.” Annual sales have stabilized at about 220,000 a year.
Slow growth makes for stiff competition between the top recreational vehicle makers. Fleetwood and its competitors, like No. 2 Winnebago, advertise heavily in motor home buying guides and magazines. The companies are almost always represented at the nearly 200 RV shows nationwide that begin in January.
Fleetwood, which spends $10 million a year on research and development, has even gotten a patent on its design for the Bounder motor home, which has a false floor that can dramatically increase the amount of storage space.
Although the industry is looking at a sales downturn this year, the long-term future for motor homes is bright. The leading edge of baby boomers, now in their early 40s, will eventually approach motor home buying age, said Werkstell. “The demographics are very good.”
