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RVIA Economic Impact Study

The Recreation Vehicle Industry Association commissioned an Economic Impact Study on the RV industry, released on June 7, 2016. The study found that the RV industry contributes about $49.7 billion in economic output or 0.28 percent of the Gross Domestic Product. Through its production and distribution linkages, the industry impacts firms in 426 of the 440 sectors of the United States economy.

Nationwide, the industry is responsible for 216,170 jobs, both directly and inderectly, creating an economic impact of $37.5 billion. The full study results, along with each individual state and congressional district's economic impact is available on the website by clicking here .

RV News Exclusive: The Danger of Longer RV Manufacturer Lead Times

Thu May 18, 2017
Author: Scott Hansen

A couple enters an RV dealership, excited about the chance to roll off the lot in their new RV.

When they meet the eager salesman, everything sounds great. He seems to really know his stuff and care about getting this couple into a new RV.

Then comes the caveat: The model they want isn’t on the lot yet. It’s been ordered months ago, but the dealership is still waiting for it to be shipped.

What’s worse, there isn’t even a shipping time from the manufacturer. There’s no way to tell when the units will arrive at the dealership.

The demand for recreational vehicles has never been higher. Dealers are selling out of their vehicles as soon as they arrive on the lot and then are waiting longer and longer for the new models to arrive.

The couple, which was intent on leaving the lot with the purchase, now has to leave. Perhaps they start thinking of timeshares or boats.

The Problem

This is a problem facing many of the RV dealers throughout the country. Lead times for units to be shipped to the lots is now in the 6-month range and growing. The issue stems from a perfect storm of great interest and low body count.

“We’re hearing that all the manufacturers are having a heck of a time trying to find employees,” Tim Biles of Pikes Peak Traveland in Colorado Springs, Colorado says. “Another thing is that there is this huge demand for RVs that they’re not able to produce them quick enough.”

Even with so much demand for RVs, the problem of the lengthening lead times means customers are starting to become unhappy and dissatisfied with the amount of time they’re being asked to wait for the product they want to spend a lot of money on.

“Are we that unprepared for this kind of uptick?” Padgett says. “It’s great times in the industry right now, but we’re ill prepared. And we’re losing people. When someone wants to buy an RV and spend their discretionary income, they want to do it right now. Otherwise, they’ll go somewhere else and buy a timeshare or something. It’s an odd thing, because I thought we would be more prepared.”

In the past, Biles says he could count on product being at his dealership between 8-12 weeks on a consistent basis. That helped the dealers in the state be able to project when to order product so they could have the units on their lots ready to sell. Even in peak time, Biles says 10 weeks was a normal time, but it was at least consistent.

About a year ago, however, Pikes Peak Traveland ordered its product in January, but it didn’t arrive until late May, a wait time of nearly 20 weeks.

“The spring and fall is the good selling season for motorhomes in Colorado,” Biles says. “We don’t turn a lot of motorhomes in the summer time, so we had completely missed our selling season.”

This year, Biles decided to give the manufacturers plenty of time to make it up, ordering units in September, giving the makers an extra three months to get it to them. Again in mid-to-late May, Pikes Peak is just now getting the units in, meaning another missed selling season.

“Last I checked, I have 22 units on order from February from the factory and they don’t even have a delivery date. They have production dates, meaning that they’ll go online somewhere in the weeks of mid-June that we ordered in February.”

The same problems exist elsewhere in the country. Padgett says he has units still out there that he ordered in December. Hayes says the lead times increasing to five months makes it difficult to project what he needs when he has to order so far in advance.

“The manufacturers are running more behind than traditional as far as being able to provide us with the back end support we need to take care of our customers,” Hayes says.

Lindsey Reines with Reines RV Center in Manassas, Virginia says the problem in the schedule is simply an equation of higher demand than supply.

“They can only build so many vehicles,” Reines says. “This is the busy season right now. If you don’t have them now, you’re not going to get them until the season ends. It’s a shame you have to do this - to have them here in November or December or January waiting for warm weather to come. Then by July, we just have to hope we have enough.”

Possible Solutions

Solutions vary based on location and the needs of the dealership. But all of the dealers agree that something needs to be done.

Padgett says the solution can be found in the amount of products being offered, because the large amounts of products the manufacturers are attempting to sale in the current upturn is becoming too convoluted and starting to hurt the dealerships who are waiting for the products they previously ordered.

“I think they need to fine tune their product offering,” Padgett says. “You’re a manufacturer and you have every price point covered. Why are we coming out with a line within a line or another brand when we can’t supply the stuff that we have out there? Why create more? I think we need to streamline our product offering to make it the best you can.”

Another option has been to bulk up all in one order, so when product arrives, the dealerships have it for the year. Hayes says that’s what he did this year, and while it has helped in the short term, it is becoming increasingly more difficult to project what kind of products he will need for the year before he has seen what the current product does on the market.

Biles agrees and says some dealerships don’t have the space to bring in a full year’s worth of inventory at one time.

“How do you determine what you will carry and how many through the summer months?” he says. “The point we’re at now is when you sell through it, you won’t have any replacement until the summer ends. People can plan the entire season’s sales all at one time, but we run into a problem of having enough room on the lot. Dealerships with tremendous acreage may work, but we’re only at 3.5 acres.”

On the back end, an obvious solution, but one with a difficult execution is for the manufacturers to hire the right number of workers. Several manufacturers have tried to get the workforce strengthened by hosting job fairs and tapping into other related industries’ workforces, but it doesn’t seem that they can catch up quick enough.

Gulf Stream Coach has announced an expansion of its facility in Etna Green, Indiana, where Marketing Director Paul Campbell has said the company is recruiting from Kosciusko County, just south of Indiana, while also trying to recruit from the automotive industry with competitive salaries and benefits.

Ultimately, the No. 1 solution boils down to simple communication – a skill simple in theory, but hasn’t been executed, dealers say.

“Communication has been the biggest frustration,” Biles says. “If they told us it would have taken this long, we would have ordered more, so we can plan. If our rep told us that things are picking up and told us we might want to consider doubling up, we would have done it. Without adequate information, we can’t formulate a good strategy.”

Looking On

Demand for RVs is at record levels, with shipments surpassing even those of last year’s record year, month-over-month. Manufacturers are beyond busy trying to get new products introduced and others shipped to dealers, while struggling with an insufficient number of laborers.

But the customers don’t know the back end of the business. All they know is they want an RV and currently, wait lists are growing as dealers continue to wait longer for units to get in.

From a business stand point, increased demand is a good problem to have.

But the lack of supply in the equation is not.