RV Business - Questions

[speedster911]

I drive by RV dealer lots full of RV's of all sizes, trailers , new , used . Some sections of freeway have multiple dealerships in a row and it looks like the inventory sit there for months , perhaps years. It has to be millions of dollars of inventory that appear to me to not move.

Not looking to buy one - just curious if anyone knows the business. Is the margin that high on RV's that they can afford to have them sit? Whats the average time a unit sits in a lot? Do most people buy them or lease them.

[URY914]

There are so many used ones out there, some is very good condition I don't know why anyone would buy a new one.

[MMiller]

Originally Posted by speedster911

I drive by RV dealer lots full of RV's of all sizes, trailers , new , used . Some sections of freeway have multiple dealerships in a row and it looks like the inventory sit there for months , perhaps years. It has to be millions of dollars of inventory that appear to me to not move.

Not looking to buy one - just curious if anyone knows the business. Is the margin that high on RV's that they can afford to have them sit? Whats the average time a unit sits in a lot? Do most people buy them or lease them.

Originally Posted by URY914

There are so many used ones out there, some is very good condition I don't know why anyone would buy a new one.

Both very good questions I have asked myself many times. Even in a place like South Fork CO. there is a dealer with big inventory on the lot. It must pencil out just not sure how...
Further there are two storage places within a half mile of my house storing hundreds of RV's that I bet don't get used twice a year. Being in the rental business for 25 plus years, if you are not going to use it 70% or more in utilization you are better off renting it.

1st world, pure USA unique situation I assume..

[Nickshu]

There's a huge dealer nearby where I live...they have an "indoor showroom" that has to be 4 football fields in size plus acres and acres of RV's in inventory sitting outside. I think the same thing each time I drive by there...how do they cover overhead in that place?, I don't see that many RVs on the road. It's been there for several years so they've gotta be making money to some degree.

[cstreit]

Originally Posted by URY914

There are so many used ones out there, some is very good condition I don't know why anyone would buy a new one.

This. .. but then I feel the same way about cars...

[RKDinOKC]

Friend of mine's BIL owns an RV dealership. Doesn't act or live what I would call rich, but seems to do well.

[911boost]

Nick, that dealership has changed hands a number of times. I picked up my 2011 toy hauler from there.

I agree though, I have no clue how they make it work.

[jorian]

A lot of that inventory is still owned by the manufacturer. Dealer gets terms on the units.

[CurtEgerer]

I think the RV inventories at these large dealers are pretty much in line with sales. I know when you drive by some of these super centers, you wonder how in the world could they sell that many RVs?! But it's a very small market relative to automobiles and there are very few dealers compared to car dealerships. So there are a lot of RVs concentrated on relatively few dealer lots. I think there's around 300,000 RVs sold annually in the US (versus what, 15 million cars?). Even the largest dealer in the US (Lazy Days in Tampa FL) stocks only about 1500 RVs. Most super center dealers have maybe 300-500 units. So I think it's really just a matter of the RVs physically taking up a lot of real estate that makes it look like there are so many. Plus, there are only a handful of these super center RV dealers in each state. One of these dealers told me last year they routinely sell 25-35 units on a good Saturday.

[on2wheels52]

A buddy thinks they're laundering money

[drcoastline]

I don't know the business so no first hand experience. I do live in an area that has quite a few dealers with a few hundred u nits on each lot from small to behinds to large bus types. I would think they are very much like a car dealership where they are there on terms from the manufacturer. In my area the service on these things is a large part of the business.

[red-beard]

Originally Posted by CurtEgerer

I think the RV inventories at these large dealers are pretty much in line with sales. I know when you drive by some of these super centers, you wonder how in the world could they sell that many RVs?! But it's a very small market relative to automobiles and there are very few dealers compared to car dealerships. So there are a lot of RVs concentrated on relatively few dealer lots. I think there's around 300,000 RVs sold annually in the US (versus what, 15 million cars?). Even the largest dealer in the US (Lazy Days in Tampa FL) stocks only about 1500 RVs. Most super center dealers have maybe 300-500 units. So I think it's really just a matter of the RVs physically taking up a lot of real estate that makes it look like there are so many. Plus, there are only a handful of these super center RV dealers in each state. One of these dealers told me last year they routinely sell 25-35 units on a good Saturday.

Sales are closer to 430K in 2016

The Recreation Vehicle Industry Association: Business Indicators

2017 should be a good year for RVs, as sales are already up almost 9%

[CurtEgerer]

The other crazy thing in the industry is that 80%+ of RVs are now owned by 2 companies - Thor and Forest River. They've basically bought out everybody in the last 10 years or so. And that's generally viewed as a negative in that the already poor reputation for quality control in the industry is getting worse, not better.

430,000 - that's got to be a record. I know sales have been strong for a few years now, driven in large part by retiring (or near retirement) baby boomers.

[berettafan]

don't know but always thought the RV (and boat for that matter) industries were sleazy.

[MBAtarga]

Have you considered leasing upscale portable restrooms for those large lots so customers have a conveniently close nice place to "go" when nature calls?

[legion]

Originally Posted by URY914

There are so many used ones out there, some is very good condition I don't know why anyone would buy a new one.

From what I can tell, RV's are a lot like boats:

You can buy a new one and know any problems that pop up are the manufacturers fault--but that doesn't mean any of them will be covered.

You can buy a used one from a dealership for almost as much as a new one, but you have no idea what problems it has or if any maintenance has been deferred. You also know that the dealership bought that sucker for pennies on the dollar and is making a killing on it. (Was $100k new, bought it back for $50k two years used, selling it for $85k.)

You can try to buy a used one in a personal sale, but you end up with people who think they will get what a dealership is selling the same used unit for, or people who seem willing to accept way too little for it--and you're never sure if the fact that it sat on the market for year has worn them down, they just want the money pit to go away, or there are hidden problems and they want it to move fast.

So your choices are:

1) Get screwed by the dealership when new and deal with stuff breaking that shouldn't break on a new one.

2) Get screwed by the dealership on a used one and deal with stuff breaking.

3) Try to convince the guy who is certain he is going to get a dealership used price that he isn't going to get a dealership used price, and if successful deal with stuff breaking.

4) Get a "good deal" on a used one and deal with a heap of broken stuff.

[GWN7]

The inventory is called "floor planning" and yes the profits are that great that they can sit there for years and still make money.

Floor planning is the same in Automotive, Boats or RV's. The dealer gets his inventory at cost plus for a certain number of months of the year and the rest is free (the manufacture pays the interest on the other months). There are companies that charge the interest and they have to check inventory to see that the dealer pays for the unit when it is sold. All is done via contracts that give the manufacture first right of claim on the unit sitting on the lot. Basically the manufacture (or their agent) own the inventory till it is sold to end user. This way if the dealer goes bankrupt the manufacture is protected. How often the dealerships inventory is checked depends on their financials.

[LakeCleElum]

Good question Paul, I think the same each time I pass by.

I knew a guy in Fla that sold RV's on his small lot. There is a huge markup. He said he could knock 100K off a Diesel Pusher and still make money.

[SweetWaterSurprise]

I've got an RV and was shocked when travelling through FL last year and seeing so many dealers with acres of inventory. I can't imagine them moving that inventory but people at the dealers we stopped at says there are times they can't keep certain things in stock.

[Hugh R]

I bought my RV new four years ago. I found when looking at used people take very good care of them or they don't. Used ones can sit for years, which we all know is bad for mechanical things. I start mine every few week, and run the A/C, generator, etc. and move it a few feet to keep the tires round. I also change the oil in the engine and generator every Summer. The financing sold me on buying new, 3.25% versus 6% from my credit union on a used one.

Came with a one year bumper-to-bumper warranty, didn't have anything go wrong other than a few cabinets hinges/latches coming loose. 18 months after buying a dash A/C quit and it cost me a few hundred to have a RV repair place figure out that they'd left a viton O ring out of one hose when Coachman put the dash in.

Four years later, and 10,000 miles, no issues at all. I use it about every six weeks.

Yeah, the mfgr. or his agent, owns the inventory I think. The dealer I bought from near Disneyland went BK a year or two after I bought.