Should powersports dealers consider RV servicing?

By James E. Guyette, courtesy Aftermarket Business

Although the nation’s economy may not yet be out of the woods, folks are going mud runnin’ and camping in style as recreational vehicles and the related powersports realm continues to attract an increasing amount of enthusiasts.

The National Automobile Dealers Association’s NADAguides is reporting that 2011’s second quarter saw a 23 percent rise since the beginning of the year in powersports equipment site traffic, with consumers still able to find used and late-model units within the range of affordability. (The watercraft category was riding a wave that surged 54 percent, and boat dealers were having trouble keeping used inventory on their lots.)

“As consumer confidence continues to grow, the interest in motorcycles, ATVs and the like will also continue to spike, especially with smaller, entry-level machines,” says Troy Snyder, NADAguides’ director of product development.

Inquiries regarding recreational vehicles were up by a robust margin of 29 percent. NADA’s analysts attribute this growth to lower-than-anticipated fuel prices as people planned outdoorsy vacations with a close eye on personal finances.

“Fuel prices did not reach $5 a gallon as many economists predicted, making RVs an affordable option for families to escape from daily activities and enjoy nature while still having the creature comforts of home,” Snyder says.

And powersports is enjoying a linkage with motoring about in an RV, according to Kevin Broom, spokesman for the Recreation Vehicle Industry Association (RVIA). (The organization uses the term “recreation” without the “al” tacked on at the end.)

Branching out in popularity are models known as Sports Utility RVs or SURVs. Also called “toy haulers,” they come with storage compartments designed to accommodate powersports-related outings. “When you park it, you back out your ATV or motorcycle and you have that extra living space,” Broom explains.

The entire RV channel represents “freedom, fun, flexibility and family,” he says. “It’s deeply rooted in what Americans value.” The down economy has merely resulted in a slight shuffling of vacation activities.

“The RVers have never stopped using their RVs – they’ve adjusted their trips. Instead of a 3,000-mile trip, they’re taking a 250-mile trip,” says Broom, noting that a recently released survey reports that 90 percent of RV owners took three or more weekend jaunts this past summer.

The best news for the aftermarket may be that the survey also reveals that 42 percent of RVers choose an independent service center for maintenance and repairs; 40 percent patronize an RV dealer and 18 percent cite “other” – presumably relying on do-it-yourself skills.

Broom also points out that 60 percent of RV owners request that repairs be conducted by a certified RV technician once they are at your shop. To help facilitate that trend, RVIA is rolling out a new and improved array of technician training programs.

The sales figures seem to indicate that offering RV repairs could create opportunities, particularly in the West, South and other specific areas where outdoor activities beckon.

Despite the nation’s sluggish economy, RVIA was approaching a sellout for its Nov. 29-Dec. 1 National RV Trade Show in Louisville, Ky.

Exhibit space for suppliers is completely accounted for as 98 percent of the booths set aside for manufacturers have been sold. The event is expected to draw 8,500 RV dealers, warehouse distributors, accessory store owners, campground operators and other exhibitors.

The latest University of Michigan RV Consumer Demographic Profile Study shows that the number of RV-owning households has grown to a new peak of 8.9 million households, up from 7.9 million in 2005.

Some 8.5 percent of American households now own an RV, compared to 2005’s figure of 8 percent.

“Today’s record RV ownership levels reflect the enduring appeal of the RV lifestyle despite economic challenges,” says Dr. Richard Curtin, a University of Michigan professor who directed the study.

RV ownership rates have surged among adults aged 35-54 and 55 and over, according to Curtin. In the 35-54 demographic, RV ownership rose from 9 percent in 2005 to 11.2 percent today. Among those 55 and older, ownership rates grew from 8.6 percent to 9.4 percent. Ownership rates among young people 34 years and under fell slightly from 5 percent to 4.7 percent.

“Growth among the 35-54 year-old age group is impressive,” says Curtin, citing publicity generated by the RVIA and RVDA, the National RV Dealers Association. “I believe the industry’s Go RVing outreach campaign had a lot to do with this growth. This is a strong finding for the industry’s future.”

Travel trailer ownership rates – meaning that a vehicle is needed to pull them – have experienced the fastest growth, going from 4.1 percent in 2005 to 4.8 percent in 2011.

Motorhomes also saw growth, from 1.9 percent to 2.1 percent. Rates among truck campers and folding camping trailers were nearly identical. Truck camper ownership rates are 1.7 percent today vs. 1.8 percent in 2005. Folding camping trailers are owned by 0.5 percent of households today compared to 0.4 percent in 2005.

Providing repairs and maintenance to keep existing RVs on the road and serve the used-vehicle marketplace may be an ongoing source of revenue as sales of new RVs are expected to slow.

RV shipments are expected to total 247,500 units in 2011, a gain of 2.1 percent above the 2010 total of 242,300. Shipments are expected to decline 2 percent in 2012 to 242,400.

“RV sales face challenges from the slowdown in economic growth,” says Curtin. “Just as the last downturn was more severe than typical, the slowdown in the year ahead can be expected to be milder than average, but, unfortunately, more long lasting.”

The flatter projection for RV shipments is based on recent steep declines in consumer confidence that coincided with the debt limit showdown in the U.S. Congress. In addition, Curtin cites a “pervasive uncertainty” about job and income prospects, stagnating wages, depressed home values and the likelihood of rising taxes. Each of these factors will adversely affect RV sales, he says.

“As a result,” he notes, “consumers have become more defensive minded, favoring spending cutbacks in response to financial setbacks rather than drawing down their savings or increasing their debt.”

According to Curtin’s analysis, these economic conditions will persist and put pressure on the RV manufacturing segment as new models hit the sales lots. “Rightsizing RVs for the decade ahead will require fresh thinking about design and layout as well as features and amenities,” he says. “Those that adapt and evolve their products to meet the new economic realities will reap the benefits of market leadership.”

This article originally appeared in Dealernews sister publication Aftermarket Business. Posted by Holly Wagner

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