An interesting thing happened the other night as I watched TV. A car commercial came on with some grainy 1950s footage of happy Americans packing the family car for a trip. For the next sixty seconds the viewer was treated to a montage of scenic locations and campsites and endless miles of unfolding roads. There was no discussion of the car itself. The message summed up with a pithy comment: “It might be a while before we’ll see America from 35,000 feet,” the narrate intones cheerfully, “But the view from six feet is even better.”
It didn’t take a lot of reading between the lines to interpret the unprecedented message here. Air travel is either not an option or actively being avoided by many Americans right now due to the coronavirus. But the good folks at Kia would like to remind Americans that there is another option worth considering: the road trip. It goes without saying that they feel one of their vehicles would be the perfect choice for just such an adventure.
Summertime in the U.S. is vacation time. The weather is pleasant, the waters are warm, and after a long winter, Americans are itching to get out and have some fun. (And last winter was a looonng winter, wasn’t it?) On top of that, most of us have spent the past few months sticking closer to home than normal. Chances are your closets are organized within an inch of their lives and you’re ready for a change of scenery.
The road trip may seem like a novel and nostalgic option for many people, but for the RV community this is just business as usual. RVing and road trips are synonymous and always have been. The RV industry is built on the idea of taking your own bed and kitchen and living room on vacation and NOT navigating crowded airports and restaurants, security screening lines, rental cars, and high-turnover hotel rooms. In a happy quirk of fate, RV travel hasn’t had to adapt itself in any way to accommodate the ever-changing pandemic guidelines. It’s a lifestyle that was about social distancing before social distancing was even a thing.
And the RV sales for 2020 reflect the groundswell of renewed interest, running well ahead of sales for last year. That is very good news at a time when there doesn’t seem to be a lot of good news to be had –especially in the travel industry.
While this is a huge relief for many manufacturers –and their many employees and suppliers- it presents an unexpected dilemma: limited stock of new RVs. Almost all RV manufacturers spent several months this spring either completely idled or running a skeleton crew due to concerns about the coronavirus. Output dwindled to a trickle –at a time of year when RVs are typically being built fast and furious- and skittish plant owners, wanting to err on the side of caution, cut production numbers, anticipating a soft market.
Instead, RV sales took off and many manufacturers were caught off guard by the sudden clamor for their products. While everyone now rushes to catch up to demand, the end result for some could still be dire. Historically, any calamity in the RV industry ends up with the most vulnerable manufacturers hit the hardest, and being idled for several months was an unprecedented calamity.
With this is mind, and despite a strong demand currently, we are predicting that a handful of manufacturers will file for bankruptcy or be bought out by competitors in the coming months. Those manufacturers with deep cash reserves and easy access to low interest loans will be fine. (Thor and Winnebago come to mind.) They have the rainy-day funds to see them through a calamity –and will actually be in a position to gobble up some less fortunate competitors in the days ahead.
So what does this mean for the man on the street, or the couple shopping for a new motorhome, or the retiree ready for his first fifth-wheel? On the surface –and on the dealers’ lots- things won’t look very different. Some manufacturers will disappear completely, but only those so riddled with problems that they can’t find a willing savior to purchase their assets. However, their remaining stock will linger until sold and should be approached with caution.
During the recession of 2007-2010, a slew of companies went by the wayside and many people bought some surprisingly affordable RVs without knowing the manufacturer was in the process of boarding up the windows and pulling the phone lines from the wall. Imagine the sinking feeling that comes with realizing that your brand-new motorhome has arrived without manufacturer support or warranty coverage. For obvious reasons these are known in the industry as “Orphan RVs”.
This is one of two scenarios that today’s RV buyer needs to keep in mind. The second one is harder to suss out because for all intents and purposes, the company remains in production and appears to be doing fine. These are the companies that find themselves in dire straits and accept a buyout offer from a competitor. The purchasing company sees an opportunity to scoop up a well-known brand for pennies on the dollar, but has no interest or incentive in taking on the problems that brought them down. (Warranty claims, for instance.) The solution for these bailout buyers is to purchase the “assets and brand identity”-but not the company itself. In other words, they buy the tools, assembly lines, manufacturing machines, factory, designs, and brand names, but NOT the company itself. While this may seem like the same thing as buying the company itself, it isn’t.
Once completed, the new owner sets up a brand-new entity that employs the brand name and logo, but with a slight difference to set themselves apart from the now-defunct original company. (Ex. The Winding River RV Company quietly becomes Winding River, Inc.) Most people never notice the difference, but this ever-so-slight change enables the new Winding River, Inc. to claim no responsibility or obligation to honor the warrantees and promises made by The Winding River RV Company.
It’s been just over ten years since the RV buying public had to keep their eyes peeled for Orphan RVs and the name-change shell-game, but if history is any indicator, both of these tactics will be slipping in to the market in the months ahead. Hopefully, the strong demand now will spare some of the manufacturers, but probably not all of them.
Summer 2020: 4 Critical Buying Tips
1.) Do you research before you buy. Our Travel Trailer & Fifth Wheel Comparison Guide and Motorhome Comparison Guide both provide in-depth articles about all the main RV manufacturers –and their relative financial health.
2.) Consider an Extended RV Warranty from an independent warranty provider like WholesaleWarranties.com. Mention “RVReviews.net” and they’ll provide an additional discount. An extended warranty can be a lifesaver if your RV manufacturer finds themselves in trouble.
3.) Avoid any RV built by a struggling company. Remember, any money saved due to a big discount from a desperate manufacturer today will be lost if your resale value plummets if they close their doors.
4.) The so-called 2021 model year RVs we’re starting to see are largely warmed over 2020 models. Most manufacturers were shut down during the critical model year design phase and have been forced to go to market with little in the way of new features or changes. Opting for the nearly identical (and heavily discounted) 2020 models can save today’s buyer thousands of dollars.