Will The RV Industry Survive The Economic Crisis?

Unfortunately, the immediate future of the RV Industry is not looking bright. I am afraid there will still be a few more RV Manufacturers going out of business.  Once the dust settles, the RV Industry will start to slowly grow once again and yes, people will start to buy RVs again.

I am going to use the example of the Dot Com Bubble burst of 2000 and 2001 to try to explain what has happened to and what is going to happen to the RV Industry.  You are probably asking yourself "What the heck does the Dot Com Bubble Burst have to do with the RV Industry?" stick with me here it will all make sense at the end (I hope).

In the late 90s more and more people were getting on the internet.  Some retailers and entrepreneurs saw the internet as an opportunity to start selling tons of merchandise.  So they started up a bunch of websites selling everything from pet supplies to music CDs.  The philosophy of some of these dot-coms was "If we build a website people will come and buy all of our stuff".  So the dot-coms starting borrowing millions of dollars from the banks and went public with their stock so they could build their websites.  The stocks kept soaring and the dot-coms kept borrowing more and more money to add on to their websites and advertise them.  There was only one problem; a lot of these dot-coms were making no money at all.

In fact there became a glut of dot-coms on the internet all spending millions on their websites to sell their stuff.  These dot-coms knew they couldn't fail, after all it was the internet and everybody was making millions of dollars on the internet weren't they?

Well, all the sales didn't come in as expected, in fact some of these dot-coms never made a profit the whole time that they were in business.  Now the banks were getting worried about some of these dot-coms, because loan payments were not being made on a timely basis and some of the banks started to call-in some of the loans.  Now the shareholders were getting worried because of lack of sales and profits, defaulted loans, bad business practices, etc and they started selling off their stock like crazy and stock prices plummeted and lot of the dot-coms went belly up (out of business).

Here are just a few of the dot-coms that went out of business, Beyond.com, Boo.com, Pets.com, KOZMO.com, eToys.com, eXcite.com and so on and so on.  But wait if you search the internet you can still find some of these websites, "What's up with that?"  Well, some of the other dot-coms that did not go out of business bought their names and are using them.

Now there were some survivors of the Dot-Com Bubble Burst such as eBay.com, Amazon.com, Travelocity.com and Yahoo.com to name a few.  It took these survivors awhile to get back on track, but they are now flourishing.

So what went wrong?  Rather than trying to figure out what the consumer really wanted, the dot-coms adopted the philosophy of "if we build it they will come" and "if they don't come, we will just borrow more money and make our website bigger and advertise more until they do come".  It never dawned on the dot-coms that not all of the internet visitors were ready to buy stuff on-line, because they were not sure how secure their transactions would be (there was no consumer confidence). 

These dot-coms also ignored the fact that were lots of other websites that were selling the same stuff they were and that these other websites actually understood what the internet consumer wanted.  These other websites were doing a better job at customer service, etc.  These big dot-coms just ignored the fact that there were too many websites selling the same stuff and ended up going out of business.

Does any of the above sound familiar?  During the 90s and into the 2000s many of the RV manufactures increased production and opened new factories as a result of strong RV Sales.  Of course a lot of the manufacturers had to get loans to continue their expansions.  According to the Recreational Vehicle Industry Association RV sales peaked in 2006 at about 390,000 vehicles.  Some of the RV Manufacturers were caught by surprise when RV sales started to decline in 2007.

Then came the volatile fuel prices which caused a lot of potential RV buyers to steer clear of buying "fuel-guzzling" RVs.  To be honest, there really has not been a major improvement in fuel mileage in the motorized RV category for the past two decades.  Now, if the fuel prices were not enough to hurt the RV Industry, the housing loan debacle sure was.  Lending institutions were being hit hard by subprime loan defaults.  So their reaction was to tighten up the loan market making it harder for someone to buy a "luxury item" such as an RV.

Then to put the final nail in the coffin of the RV Industry the stock market decided to make a "major price correction" in other words the stock market plummeted.  This price correction affected a lot of "baby boomers" financially.  Since baby boomers are the major buyers of RVs it also affected the RV Industry.  Because the RV industry was too slow to react to the economic downturn, they produced too many RVs that were not selling, creating the new RV glut that we have now.  So the RV Industry has gone from "feast to famine" in 2 1/2 years.

So, as you see there are quite a few similarities between the Dot-Com Bubble Burst of 2000 and 2001 and the RV Bubble Burst of 2008 and 2009.  Just like the Dot-Com Bubble Burst there will be survivors of the RV Bubble Burst.  The number of RV Manufacturers that survive is yet to be determined as we are in the middle of the RV Bubble Burst.  But there will be survivors.

What will happen to the RV Industry in the future is going to be in the hands of the surviving RV Manufacturers.  All of the surviving RV Manufacturers by default will have larger market shares of RV sales then they had prior to the bubble burst. Some will come back quicker than others.  Some may even start to look at the future and build some innovative motorized RVs that are far more fuel efficient, while still providing the luxuries that RVers expect.  Hopefully all of them will have learned from this experience; that they need to keep their ears to the ground and have contingency plans in place on how to react quickly to changes in the RV marketplace.

What can RV consumers expect?  Once the glut of RVs is sold off, you can expect fewer RVs to choose from.  You will not have a selection of unlimited floor plans to choose from.  Depending on the type of RV you are looking at you may find that there are only two or three companies making them.  You may also find some very innovative RVs to choose from made by either existing RV Manufacturers or brand new RV Manufacturers who are trying to make a name for themselves.  Either way, the RV Industry will still be around, hopefully a little bit wiser from their experience over the past couple of years.

RVing is not dead; it is just trying to catch its breath.  The long term future of RVing will be bright as long as the same mistakes are not repeated.