Image: Damon Motor Coach
Brian Bohannon  /  AP
Damon Motor Coach displayed it's new Avanti, a 31.5-foot-long, Class A motor home Dec. 2 at the Recreational Vehicle Industry Association's 46th Annual National RV Trade Show.
updated 12/4/2008 6:24:27 PM ET 2008-12-04T23:24:27

Under the gloom of plunging motor home sales and with travel trailers stacking up on lots, recreational vehicle makers and dealers at their national trade show this week tried to lift their spirits by joining in song.

“You gotta have heart,” they sang at the kickoff breakfast, trying to stay resilient in an industry that’s hit a big speed bump. The swooning economy and a credit crisis that makes it tougher to finance a six-figure purchase are keeping potential RV buyers off the road.

“These are ugly times,” said Richard Coon, president of the Virginia-based Recreation Vehicle Industry Association. “I’ve seen lots of downtrodden faces, and for good reason.”

RV companies showcased their newest models at the industry event Tuesday through Thursday, including hybrids and slimmed-down motor homes touted as more energy friendly. Now the trick is to lure skittish customers to dealers’ lots.

Sideswiped by the U.S. economic downturn, robust RV sales earlier in the decade have given way to lean times for the industry.

Through October, shipments from RV companies to dealers for the year fell 27 percent from the comparable period in 2007, according to RVIA. The downturn is expected to stretch into 2009, when shipments are forecast at 186,800 units, about 25 percent lower than this year’s projected total of 248,000, according to the association, citing statistics from Richard Curtin, director of consumer surveys at the University of Michigan.

“This industry is in the middle of a three-year downturn, and you can really probably even date it farther back than that,” said Kathryn Thompson, who follows RV companies for Avondale Partners.

At the height of the industry’s upturn this decade, shipments totaled 390,500 units in 2006. But those are now fond memories for manufacturers and dealers feeling the economic pinch.

Larry Troutt, an RV dealer in the Houston suburb of Waller, said his sales are down about 20 percent from last year. Customers are still checking out his stock and he’s still making deals, but a larger percentage of his inventory has been stuck on his lot.

“Right now, my sales manager has my approval to sell anything that’s close to a year old for what we paid for it,” said Troutt, who has a couple hundred units on his lot.

Tom Stewart, a retired oil company employee who heads an RV owners club outside Seattle, said he’s noticed the effect of the tough economy. The club’s members are taking shorter trips to save on gas, he said. And he’s looked for ways to save money on the RV trips he takes with his wife.

Major Market Indices

“We’re doing a lot more inexpensive overnighters, looking at the free RV parking,” he said. “If we’re en route to a stop, rather than pull in to an RV park with full hookups and pay $25, $30 a night, we have lots of casinos out here that welcome RVs, and we’ll use those.”

Expensive, “discretionary” items like RVs are often the most vulnerable to the downturn because they are easy to put off.

Towable RVs, affixed onto pickups or hitched to the back of another vehicle, run between $4,000 and $100,000, according to the RVIA.

Standalone motor homes can start at around $41,000 for van-like “Type B” RVs, according to the industry trade group, while spacious, bus-like “Type A” vehicles run as much as $400,000 for top-of-the-line models.

Meanwhile, the summer’s run-up in fuel prices have also dissuaded customers from plunking down money on the fuel-swilling vehicles. Type A RVs typically get between 8 and 12 miles per gallon, according to RVIA spokesman Kevin Broom. Type B and Type C vehicles are more fuel efficient, with some models getting as much as 20 mpg, Broom said.

Although gas prices have fallen more than 56 percent from their summer highs, RV sales have not picked up, Thompson notes.

“The No. 1 thing we need right now is consumer confidence and the restoration of credit,” she said.

At the trade show, RV manufacturers Winnebago Industries Inc. and Fleetwood Enterprises Inc. unveiled diesel-electric hybrid concepts expected to improve fuel efficiency by more than 40 percent.

“We know that the RV of the future must incorporate advanced technologies to remain relevant and viable in a changing world,” said Paul Eskritt, president of Fleetwood’s RV group.

Dutchmen Manufacturing Inc., a unit of Thor Industries Inc., showed off its EcoLogic, an 18-foot towable trailer whose walls, floor and roof are made of thermal plastic rather than wood, making it lighter.

But the optimism around new model rollouts comes amid a dour climate for the industry.

In the past 12 months, 45 of about 2,850 RV dealerships around the country have closed, according to the Recreation Vehicle Dealers Association.

RV makers, meanwhile, have reported dismal financial results and are closing factories. Last week, Fleetwood, based in Riverside, Calif., posted a $57 million quarterly loss and said it would close eight plants and lay off 760 workers.

Coburg, Ore.-based Monaco Coach Inc. said it will slash white-collar salaries between 20 percent and 40 percent. The company closed two facilities in Indiana in September and has slashed its motor home production in half.

Eskritt predicted the industry will weather the downturn because the “RV lifestyle is not going away.”

“People will always enjoy the great outdoors,” he said. “Owning a motor home, travel trailer or fifth wheel has become a part of the American dream.”

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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