RV Brokers ­
Are They Destroying Dealer Profitability?

Don Magary, Editor

I suppose RV brokers have been around for years, but with the advent of the Internet, the number seems to have mushroomed. Putting up a web site and promoting it has given RV brokers access to literally thousands of potential clients and a national audience at a miniscule cost.

For the RV consumer dealing with a broker has its appeal. Brokers promise to get these buyers a better deal than they could have gotten on their own. Since most consumers feel completely vulnerable when they walk on to many RV dealer's lots, the idea of working through a broker gives them the confidence that they are going to pay rock bottom prices. They believe the broker knows the "ins and outs" of the system, what the dealer markup is and just how slim a margin a dealer might be willing to take.

But in the final analysis, RV News believes that nobody wins in these deals except the broker. The consumer may think he or she has won - but have they really? Who's their advocate when something goes wrong?

Since we started the RV America On Line Internet site more than three years ago, we have been approached by several brokers wanting us to host their web sites to have access to the thousands of potential buyers who visit the site every day. We actually let one broker on RV America albeit reluctantly. We didn't see a way around it without showing discrimination. That was not a good decision on our part, and we regretted it from the beginning. It not only cost us business because dealers did not want to be on a web site where their customers could also find an RV broker, but in our hearts we believed it wasn't in the best interest of the customer or the industry.

Fortunately, this broker got so busy taking his money to the bank, according to him, that he didn't have time to pay his bill on time so we abruptly advised him that he had one week to find another place to host his site.

Since then we have a policy not to accept " broker type"

business. I say "broker-type" business because it's amazing how these guys try to worm their way around our policy by proclaiming they are in fact consultants rather than brokers -- it seems they are no more comfortable with what they do than the rest of us are. A few have threatened to sue us for "restraint of trade" and another went so far as to threaten to start a web site similar to RV America for the sole purpose of running us out of business for not accepting his business.

What really amazes me, however, is how they find partners in the industry who will work with them. Obviously, without access to product, they really have nothing to sell other than advice. I keep hearing horror stories about deals cut through a broker where a dealer actually participates.

At least one RV manufacturer is taking a strong stand on RV brokers. At National RV if a dealer sells through a broker National RV will terminate that relationship -- period. As a matter of fact National is revising its dealer agreement to include this requirement.

RV News talked to Mike Woods, national sales manager at National. Woods said, "RV brokers have the chance to destroy dealer profitability in this industry like they did in the car industry. I'm concerned that brokers will kill the little guy that has to make a profit. The 'Moms and Pops' are the guys that get creamed."

Woods cited several examples. He said, "There is a small dealer in Pennsylvania -- these northern dealers have to make some money to last through the winter. A three-time customer was negotiating with this dealer and on a follow up call, the

customer told the dealer, 'Oh, we already bought one. We bought it through a broker in California; however, I would like set up an appointment to get service from you.'

"We terminated that dealer relation in California. What that dealer and broker did was take the Pennsylvania dealer's profit that would help him make it through the winter and then they stuck him with the service."

And what that does is not only hurt the dealer, it becomes a major problem for the manufacturer too. Woods explained, "We have a crippled customer out there that the local dealer, rightly so, is reluctant to

service. His loyalty is to that customer who bought from him so he gets priority in the service department. The customer that bought through the broker is left with no place to get his unit serviced or at best, he'll only get service when all the local dealer's customers have been taken care of."

When we talked to Woods he had just returned from the Tampa show and saw another deal go sour because of a broker's intrusion. Woods said, "We sold one deal and then the buyer came back in with this broker and busted the dealer down to a $700 deal on a $60,000 motorhome. How does any dealer exist on that? That's the quickest way to go broke that I can think of."

RV News believes that National RV has set an outstanding example for other manufacturers to consider. RV manufacturers have a responsibility to be good partners with its dealer body, and to be a good partner, manufacturers have to help eliminate scenarios that make the playing field unfair and uneven. Without a strong dealer body, our industry will suffer long range consequences that will be detrimental to everyone, including the RV consumer.

And dealers that care about their businesses and the industry should resist the temptation to help the RV broker reek havoc and destroy profitability. And yes, you may lose a deal, but those kinds of deals aren't worth much anyway. Let's turn the faucet off. Let's not give RV brokers anything to sell.

Editorial note: RV News would like to hear your opinion on RV brokers. We would also like to hear dealer examples of actual cases where an RV broker intruded on a deal and what you did to counteract the broker or lost the deal because you were unwilling to participate in the broker's game. You can send your response via e-mail to: rvnews@rvamerica.com or fax to: 602-784-4420. The mailing address is: RV News, 408 E. Southern Ave., Tempe, AZ 85282-5200.

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