Castles on Wheels : Sales of Luxury RVs Are Rising Despite Prices Up to $450,000

Actor Tom Cruise owns one. Baseball players Rod Carew and Bert Blyleven have also bought them.

Luxury motor homes with marble floors, microwave ovens, built-in bars, ice makers and coffee makers, oak cabinets, leather sofas, wallpapered bathrooms and satellite dishes are like castles on wheels--for those who can afford them.

“It amazes me how many people have the money to buy a luxury coach--and how many people write checks for them,” said Steve Banas, general manager of Sunset Motors in Fountain Valley.

Banas said such celebrities as Cruise and Carew as well as entrepreneurs, business leaders and retirees are among Sunset Motors’ buyers of motor homes priced from $50,000 to $450,000.

Despite the recession and a tough business year, Banas said, Sunset Motors’ sales are not hurting, especially in the higher price ranges. Sales for the privately held company for the 12 months that ended July 1 were up 20%, said Bill Whitledge, the company’s president and founder.

“The type of buyer we have is not hurt by the recession or slowdown in the economy,” he said.

The Recreation Vehicle Industry Assn. in Reston, Va., reports that deliveries to retailers of all motor home products in 1991 totaled 42,200 units, a decrease of 19.3% from 1990 and down to the lowest level since 1982. Moreover, for 1991, total retail value of all new motor homes sold was $2.2 billion, down 15.3% from 1990.

For Sunset Motors, however, sales continue to be steady. In October alone, the company sold 58 motor homes during a 10-day show in Pomona, Banas said--that’s $8.2 million worth of RVs.

And Sunset Motors was not alone in its success, said Margie Wheeler, executive director of the Southern California Recreation Vehicle Dealer Assn.

“Everybody was up 40% in sales over the show last year,” Wheeler said.

She noted, though, that motor home sales in Southern California for most of this year have been down.

“Our high season never got here,” Wheeler said. “But it has picked up recently. December is usually a slow time of year, but buyers are out there right now. I hear that from all the dealers.”

Banas said the keys to Sunset Motors’ steady sales are its repeat customers and its success in exposing its product line to buyers.

“We’ve been very aggressive in marketing our product at shows,” he said. “We go all over the country and sell motor homes.”

Anticipating that business will continue to roll on, Sunset Motors has consolidated its Irvine and San Diego dealerships to a location in Fountain Valley.

The company, which Banas said is the leading dealer of luxury motor homes in the Western United States, is already operating at the new site with an inventory of about 40 RVs. By mid-January, he said, the location at Ward Street and Talbert Avenue fronting the San Diego Freeway will have more than 100 motor homes on display and will have increased its work force from 35 employees to about 50.

Sales are projected at about $50 million for the first year at the new location, Banas said, compared with combined sales of about $48 million a year for the two previous Orange County sites. The company’s goal for the next five years, Banas said, is to build the business to annual sales of about $100 million.

Sunset Motors is leasing the four-acre site from Burnham USA Equities Inc. in Newport Beach.

Scott T. Burnham, president and chief executive officer, said the 15-year lease agreement with Sunset Motors is valued at about $7 million. Burnham, whose company specializes in commercial real estate, said the site is unusual because it has 700 feet of freeway frontage and is exposed to more than 275,000 cars a day.

“If they can capitalize on a small percentage of the visibility, that’s extremely valuable to them,” Burnham said.

Banas said the toughest part of the business is advertising luxury coaches and being next to the freeway will help with that.

“How do you tell people to please come down and spend $300,000?” Banas asked. “The key is to merchandise these coaches in a way we cannot do in our present locations.”

Whitledge agreed that freeway visibility is vital to increasing business.

“I think (sales) will pick up considerably,” Whitledge said. “We’ll increase our sales by 20% to 25%,” Whitledge said.

Burnham said the property is being upgraded to accommodate the dealership. Improvements include renovation of an existing two-story building for the 11,000-square-foot corporate headquarters, which is moving from Irvine. Also included are a new 7,500-square-foot service center and a paved and lighted sales lot. The service center will open in May, Burnham said.

The company’s relocation could also prove to be a windfall for Fountain Valley, pouring an estimated $300,000 in annual sales-tax revenue into the city’s treasury.

Sunset Motors was founded in 1961 after Whitledge, now 64, decided to sell RVs instead of autos. Having sold cars since he was 16 in St. Louis, he came to California in 1952 and started a Cadillac dealership in Long Beach. By the early 1960s, however, as motor homes started to gain popularity, he realized their potential.

“It was a new thing, and the clientele for motor homes were much more qualified financially than we had experienced in the car business,” said Whitledge, who now lives in San Juan Capistrano.

In recent years, Sunset Motors has expanded with dealerships in Morgan Hill near San Francisco and two in Oregon, the second of which the company acquired in October. Estimated annual sales of those three businesses total about $60 million, Banas said.

In the past decade, motor homes have gone from being “just boxes,” Banas said, to sophisticated and comfortable vehicles with innovations such as video cameras, wiring for cellular phones, improved transmissions, added storage areas and spacious interiors. The future of the industry looks promising, he said, because baby boomers are the buyers of tomorrow.

“I see it as nothing but getting better because of the baby-boom era,” Banas said. “It’s going to explode. There are a lot of people who want to sell their homes and hit the road.”

Road Warriors

While travel trailers and van conversions are the most popular recreational vehicles in the nation, motor homes are the most expensive. With a high-end sticker of $450,000, they can cost twice as much as a median-priced home in Orange County. A look at nationwide sales: Types of RVs (RV purchases in October): Travel trailers: 11,400 Camping trailers: 3,300 Truck campers: 800 Motor homes: 4,000 Van conversions: 12,200

Source: Recreation Vehicle Industry Assn.