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In The News

RV industry holds its own despite gas prices

Source: Lansing State Journal
Publish Date: Monday, January 7, 2008
Summary: Unlike a sport utility vehicle or pickup that sometimes is needed to drive to work, an RV is something bought for no other reason than the consumer wants it.

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Rising gasoline prices are putting the pinch on pickup sales, but they're not doing much to dampen the enthusiasm of people who like their rides even bigger.

While General Motors Corp., for example, saw its pickup sales fall 14.9 percent in November, sales of some kinds of motor homes have been untouched by the cost of gas and diesel fuel.

The Recreation Vehicle Industry Association said 390,500 RVs were sold in 2006, the best year in the past three decades.

Figures for 2007 aren't yet available, though the association does expect sales to "ease back."

So, why are truck sales falling while RVs - many which require a truck or SUV to tow them - unaffected? Maybe it's because gas prices are the last thing on a buyer's mind when they enter an RV showroom.

"RVers are a different breed," said Jeff Every, general manager of Annie Rae RV in DeWitt. "They don't come in worrying about the price of gas. If they're worrying, it's about what the weather will be like this weekend."

Every attributes the attitude to the luxury status of an RV. Unlike a sport utility vehicle or pickup that sometimes is needed to drive to work, an RV is something bought for no other reason than the consumer wants it.

However, Every has noticed people are scaling back somewhat. A 30-foot trailer was the norm five years ago, but the average size bought now is closer to 25 feet.

And buyers are getting younger. Every said most of his customers are in the 30- to 55-year-old age group. They often start with pop-up campers, then move up to travel trailers or other vehicles a few years later.

Niche products on display among thousands of vehicles featured at the recent annual Recreation Vehicle Industry Association show in Louisville, Ky., showed the industry is ready to cater to the younger crowd.

Plenty of features

Some, like the Weekend Warrior vehicles, come decorated in black leather. Others feature a giant studded dog collar motif splashed across the side of the vehicle.

But even as RV fans diversify, the theme remains the same. An RV lets you get away and still take your home with you.

"It has got to be good on gas mileage," Bowling Green, Ky., resident Jamie Gregory, 26, said at the RV show as she peered inside the Lil Traveler, a 960-pound, Amish-built teardrop. "I have not outgrown tent camping yet, but this would be a nice step up."

Ever-rising gas prices are dampening RV purchases a little, RVIA President Richard Coon said.

In 2006, the RV industry posted a record $14.7 billion in revenue, after five years of rising sales, he said. This year, the Virginia-based trade association predicts that figure will slip about 5 percent.

"We sell happiness," said Fran Connors, a spokesman for the association.

And plenty of people are buying.

Spartan Motors Inc., based in Charlotte, makes chassis for diesel-powered RVs, emergency and military vehicles. Its chief executive officer, John Sztykiel, expects the RV segment of Spartan's business to grow this year.

Spartan's RV backlog - the number of orders placed and waiting to be built - has grown 20 percent from the first quarter of 2007, he said.

"Consumers are continuing to buy more RV products on a Spartan chassis," Sztykiel said. "Our sales have been up every year for the last three years."

High fuel prices and a less-than-impressive economy aren't scaring away buyers, he said. And while buyers might be skewing younger, Sztykiel said older consumers still are a force.

Most buyers 50 and up

"The largest market remains the 50-and-older group," he said. "They're saying, 'I'm not getting any younger. Let's buy the RV whether the time is right or not.' "

Interestingly, it's not the larger RVs that are suffering in the current economy. Sales of monster-sized Class-A motor homes were flat in September 2007 from a year ago, according to the most recent numbers reported by the RVIA. But sales of pop-ups, the smallest class of RVs, fell 25 percent during the same period.

"Pop-ups have been down in sales. People are more apt to buy a travel-trailer than a pop-up," said Greg Dennis, owner of Dennis RV Center in Lansing.

Dennis said first-time buyers are the ones to be most put off by gas prices. "Repeat buyers know about the cost and aren't deterred," he said.

Travel-trailers and fifth-wheel campers cost $15,000 to $45,000 and rank among the most popular models. While some newer diesel-powered camper vans yield as much as 22 miles per gallon, most motor homes still average 7 to 10 mpg, Coon said.

Banking on the trend toward continuing bigness, Ford Motor Co. unveiled its new motor-home chassis, upgraded from a towing capacity of 22,000 pounds to 26,000 pounds. The company sells the chassis to RV manufacturers, who attach their cabins. As diesel fuel prices begin to rise, Ford also expects growth in sales of powerful gasoline engines for RVs.

"It is a real anomaly," Ford spokesman Peter Syvertsen said. "People with disposable income are still out there and they are still buying big."

State Journal business writer Barbara Wieland and Gannett News Service writer Jere Downs contributed to this report.

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