Aging Baby Boomers Expected to Keep RV Industry in Fast Lane
It’s a backpacker’s nightmare, the biggest collection of RV dealers in the world. Enough Road Rangers, Cruisemasters, Silver Eagles, Palominos, Fireballs, Sundancers, Conquests and Baronets to equip an entire armored division of retired people.
It’s called Traveland USA, and within its 32 acres in Irvine--as big as a good-sized subdivision--are hundreds of RVs in two dozen dealerships. The place even has its own restaurant and, for no particular reason, a duck pond.
There are great bus-like things, stuffed with queen-size beds, microwave ovens and Jacuzzis, parked just down the street from your basic canvas-top campers, the kind you pull behind the family station wagon. You start at a couple of thousand bucks for one of those tents-in-a-box and end up a few feet away with $600,000 tour buses with wet bars and marble floors, the kind favored by rock stars and retired dentists.
California leads the nation in RV ownership and has the most dealerships too. But the last few years have been tough ones for the state’s 500 or so RV dealers. First people got edgy about the economy and stopped buying; then they got edgy about gas prices and stopped buying.
Now that the Persian Gulf War is over--and because gas prices never did go up much--people seem to be coming back to the lots. But most are looking for something with fewer frills and a smaller price tag than what the dealers would like to sell them.
It was those wacky ‘70s, the decade that brought you CB radios, pet rocks, disco and platform shoes, that spawned the recreational vehicle. Before then they were called trailers, and manufacturing them was the sort of business that people started in their garages or in old warehouses. Unlike pet rocks, though, RVs hung on and prospered, not counting timeouts for a couple of recessions and a gas crisis or two. Last year, building RVs was a $7-billion industry.
And, the industry hopes, that’s just the beginning. More than two-thirds of the people who buy RVs are over 50 years old, and right now 25 million Americans are in this age group. In the next decade, as baby boomers age, there will be three times that many, said Robert Strawn, head of the Recreational Vehicle Dealers Assn. in Fairfax, Va.
“It’s going to be a huge market,” Strawn said gleefully.
But first the industry has a few problems to overcome. One is persuading all those aging yuppies to buy an RV instead of a Mercedes or a sailboat or a fabulous stereo system.
Despite the few lavish $400,000 behemoths sold each year, RVs, after all, have a decidedly unhip, blue-collar image. Once you get people to spend, you have to persuade them that shelling out tens of thousands of dollars to drive something across the country that looks like a bread truck is more fun than flying to exotic vacation spots and staying in first-class hotels.
“It’s a fair guess the baby boomers might not be as enamored of these things as their parents were,” said Robert Curran, a Merrill Lynch & Co. analyst who follows the industry. “On the other hand, there’ll be so many older people in 10 years that, even if a smaller percentage buy recreational vehicles, it’ll mean more business for the industry.”
Up at the pricey end of the scale, where aging yuppies are expected to buy, there’s Beaver Coaches Inc. of Bend, Ore., which makes only 200 motor homes a year. With a list price of $167,000 to $292,000, it’s easy to see why.
On a recent weekday afternoon, salesman John Swaving showed a visitor the most expensive thing on the lot, one of Beaver’s Marquis motor homes--a 40-foot-long, 8-foot-6-inch-wide monster that weighs 28,000 pounds.
The diesel engine under the hood--made by Caterpillar for tractor trailer trucks--was designed to pull 80,000 pounds. It gets nine miles to the gallon under ideal conditions.
Swaving is a middle-aged Dutch immigrant in a ski sweater whose name tag proclaims him “The Flying Dutchman.” He has been selling RVs off and on for 22 years, and he is quite good at it. He swings open a cupboard over the driver’s seat to point out the $4,000 stereo system. Don’t miss the leather seats in the cockpit--or the “systems command center,” as the brochure calls it--or the electric curtains in the sitting room behind the driver.
Next comes the microwave oven in the narrow kitchen with the hardwood floor, then there’s the Jacuzzi in the cramped little bathroom and, last of all, a queen-size bed in the bedroom at the back. The whole thing is so long that it’s got a video camera mounted on the rear and a monitor on the dashboard so the driver can see who’s behind him.
It lists for $311,739 with all the gadgets. But Beaver Coaches West--one of only seven Beaver dealerships in the nation--is letting it go for a mere $229,000, or 26% off the list price, another sign of hard times. The retailer’s markup on these big coaches is probably less than 6%, says the dealers’ trade association. Profit margins on the sales are lower than that, so price-cutting really hurts.
Believe it or not, a lot of the people who buy them pay cash. “They are,” said Swaving with a trace of a Dutch accent, “the ultimate in toys.”
Owners of the expensive toys--many retired people who may spend several months each year traveling in them--tend to become obsessed with the rolling hotel suites. Some drive from one RV trade show to the next, hanging out with other owners and endlessly discussing the merits of various makes of motor homes, said a person who’s attended the gatherings.
There’s also a good bit of snobbery involved in this exotic subculture. “You can see them hauling Mercedes and even Ferraris behind them,” this person said. “I’ve even seen two of them hauling Rolls-Royces.”
Who are these people? They’re in their early 60s; many of them are retired, and they tend to have owned their own businesses, often factories, according to Larry Wright, a marketing executive for Beaver Coaches.
Beaver didn’t always make hotshot coaches. It started in 1966 in the somewhat less-rarefied business of producing fiberglass camper shells for pickup trucks. When the business went bad during the 1973 gas crunch, Beaver switched to lavish motor homes, reasoning that buyers would be affluent enough to ignore rising gas prices.
Still--like most big-ticket consumer items--motor home sales take a big hit in a recession, and this time is no exception. Beaver said it has had to mark down its prices to dealers--though the high price tags give it some leeway in discounting--to get them to order the big coaches.
In fact, sales of all sorts of RVs, even less expensive ones, are down by nearly one-fifth the past two years. Shipments from factories of all RVs--camper vans, trailers and motor homes--fell from 427,000 units in 1988 to 396,000 the next year. They fell to 354,000 units in 1990, and there’s a good chance they’ll drop again this year.
All that has taken a toll on dealers. At Traveland two dealers have gone bankrupt the past year, although they were replaced with two new ones. Many others are trying to cut inventory and use less space; the place is pockmarked with the occasional empty blacktop lot.
Across the nation, 200 dealerships disappeared in the late 1980s. And in just the past year, two established names in the RV manufacturing business--camper-trailer maker Coleman and Starcraft vans and RVs--have been sold.
Meanwhile, the business of changing the RV’s image is going rather slowly, the industry admits. This is not the auto industry; there are no General Motors or Fords, only a collection of small manufacturers, many of whom still assemble RVs largely by hand. There just isn’t the money for a big ad campaign; most of the manufacturers don’t do much more than advertise in RV magazines and occasionally on cable TV.
ON THE ROAD
Number of converted vans, campers, trailers and motor homes shipped by manufacturers by year:
1986: 379,500
1987: 400,200
1988: 427,300
1989: 395,700
1990: 354,500
Source: Recreational Vehicles Dealers Assn. of North America, Fairfax, Va.
