Class A Diesels Remain a Class Act
There’s no way to sugarcoat it: The Great Recession and its aftermath were brutal on motorhome sales, especially for diesel pushers.
A look at the numbers, courtesy of Grand Rapids, Mich.-based Statistical Surveys, shows just how dramatic the decline has been. Gas motorhome sales year-to-date as of August (latest available) totaled 4,337 units, down 57 percent from the 10,175 units sold over the same period in 2007. Diesel motorhome sales recorded an even larger decline: Sales were 3,223 units YTD as of August, down 69 percent from 10,870 units for the same period 2007. By comparison, sales of all RVs as of August are down a more modest 39 percent.
Tom Walworth, general manager of Statistical Surveys, says he sees comparatively higher diesel fuel prices versus gas and the higher cost of diesel chasses as being limiting factors to growth in the market, at least in the short term. Still, diesel motorhome manufacturers interviewed for this story tell RV PRO that they see reasons for optimism.
Retooled for Growth
No motorhome manufacturer made it through the Great Recession completely unscathed. Some, like Alfa Leisure, Country Coach and National RV, ceased operations. Still other manufacturers are now part of larger companies.
One prominent example is Monaco RV, which has been manufacturing motorhomes since the 1980s and was acquired in June 2009 by Navistar, a 175-year-old company that’s a major manufacturer of commercial trucks, military vehicles, chassis and engines. Since becoming part of Navistar, Monaco RV has benefited greatly from its parent company’s financial strength as well as its technical expertise, according to Mike Snell, Monaco RV vice president of sales and product development.
“Being a part of Navistar,” says Snell, “we are ahead of the curve. We are a part of a $13 billion company. That is bigger than the entire RV segment. Navistar has more engineers than the entire RV industry. They understand transportation. They build medium- and heavy-duty trucks, service trucks and school buses.”
Another example is Fleetwood, which has been making Class A’s since 1968 and was acquired in July 2009 by private equity firm American Industrial Partners (AIP). AIP in 2010 formed Allied Specialty Vehicles Inc. (ASV) through the combination of existing portfolio companies (E-ONE, Collins Industries, Halcore Group and Fleetwood RV), creating a company with revenues of $1 billion annually. ASV has three major business segments: Fire and emergency vehicles, RVs, and bus/commercial vehicles. Like Monaco, Fleetwood RV officials have touted the financial and engineering expertise their parent company brings to the business.
|Fleetwood RV’s American Eagle has all of the amenities RVers would find in a luxury home, including residentialstyle appliances. The Eagle’s 2012 floorplan holds the distinction of featuring the industry’s largest floorplan, 460 square feet of living space.|
“ASV affords us access to additional lean manufacturing, engineering and financial resources,” says Fleetwood RV President and CEO John Draheim.
Both companies instituted significant restructuring following their respective acquisitions. Fleetwood in 2011 reduced its number of brands and put a greater emphasis on entry-level motorhomes. Likewise, Monaco has also shrunk its offerings (the company suspended production of its Safari and Beaver brands) and refocused its efforts on smaller-sized motorhomes.
And while the challenging economy meant restructuring for some manufacturers, it provided opportunities for others. Long known for its towable units, Jayco became a manufacturer of Class A’s in 2008, when it purchased the Entegra motorhome line from now defunct manufacturer Travel Supreme.
“I think Jayco has always wanted to be in the Class A market,” says Tadd Jenkins, national sales manager for Entegra Coach. “It was all about timing and acquiring the right product and having a good base to build from.”
|Jayco entered the Class A diesel pusher market in 2008 with its purchaseof the Entegra Coach motorhome line. Picturedabove is Entegra’s Anthem model, which comesloaded with amenities. Entegra models featurea two-year unconditional bumper-to-bumperwarranty on the coach, which the company saysis the strongest in the industry.|
Market data from Statistical Surveys (as of August) shows Tiffin Motorhomes has emerged as the market leader in diesel motorhomes, with a 34.1 percent market share, up from 15 percent in 2007. Winnebago currently holds second place with 17.2 percent market share, while Fleetwood has an 11.6 percent share, Monaco has a 9.2 percent share and Newmar rounds out the top five manufacturers with a 6.2 percent market share.
Representatives for Entegra, Fleetwood and Monaco all tell RV PRO that their respective production and sales are moving upward and showing signs of growth. However, total Class A sales are down 1.8 percent year-to-date compared to the same period 2010. By comparison, sales of all RVs (towable and motorized) are up 4.4 percent through August compared to the same period 2010, according to Statistical Surveys.
The dealer base itself has changed during the past five years. Dealer information is not available for all states, but where information is available there are 20 to 25 percent fewer dealers than five years ago, according to Statistical Surveys. Understandably, many dealers that still sell motorhomes are carrying less stock and have switched to lower-priced units. Still, manufacturers tell RV PRO that savvy dealerships have adapted to the changing conditions and are doing reasonably well selling diesel motorhomes.
“This type of product (Class A diesels) warrants bigger territories and a very professional group that has the facilities and the know-how to service and take care of the client’s needs,” says Jenkins.
“Dealers are more focused on little things such as a well-trained staff, follow up, the right product and customer service. Service is key,” Snell says. “Many dealers are carrying less product than three years ago, but some of the stronger dealers are actually stocking us well.”
Motorhome Market Sees Small Demographic Shift
What about the customer base? According to the manufacturers, the demographic has remained relatively stable, although one a positive development is more younger buyers.
“Much of the customer base is not necessarily that much different than 30 years ago. Typically, they are retired couples with time to spend in leisure pursuits and visiting family and grandkids, or going to warmer climates in the winter months,” says Chris Carter, Fleetwood’s product development manager.
“However, over the past decade we have seen younger buyers of Class A’s, perhaps semi-retired, who use their coach as a support vehicle for their business, hobby or lifestyle. Among those younger customers is a segment that has children and are looking for extra sleeping and bunk designs so that family and friends can also enjoy the motorhome,” Carter adds. “We are also seeing a proliferation in ‘niche’ markets, like equestrian pursuits, dog show enthusiasts, and even NASCAR, where Class A’s are used as support vehicles for drivers and fans alike.”
“You still have your traditional RV people, but there is much greater concern on the credit side,” says Snell. “Consumers may not be going for the next bigger unit. Some are going smaller and trading down. We know we can’t rely on the same base as before – we need to reach the younger buyer.”
Strategies for Market Differentiation
Ever-changing designs and upgraded amenities are essential to staying ahead of the pack. Each manufacturer continually examines how it can differentiate itself from competitors.
“We are continually adjusting our designs and amenities in response to customer expectations. One of the more recent examples is floorplan layouts with TVs located in the middle of the layout in a more residential setting with sectional sofas and big screens. People want the feeling of being home,” says Carter.
Overall, manufacturers are responding with a positive outlook and far more forethought than ever before. They are examining their product for ever-increasing efficiency in production and appeal to a consumer that they have studied carefully.
“I will say this,” says Jenkins, “in this arena, there is no low-hanging fruit, but there is fruit out there. We just need to be better at climbing trees; meaning, we have to be more efficient, more cost conscious, and our customer service has to be spot-on.”
“Everybody has a chassis, a roof, walls, bathrooms, galley cooking areas and sleeping areas. But it is what we do between the road and the chassis rails with our bridge designs, and what we do under the roofs with our floorplans and how we build our components that make all the difference in the marketplace,” says Carter. “For example, we were one of the first manufacturers to develop and embrace ‘full-wall-slide’ technology. The sliding of a large exterior wall allowed us to develop floorplans that opened up the interior space for unique floorplan layouts and less cramped interiors for owners.
“Let’s face it, there is only so much you can do within a 30- by 45- by 8-foot rectangle – the design space we have for floorplans,” he adds. “It is what we do with the space that makes all the difference. We were one of the first to vacubond a wall, where all the components get bonded together to create strong yet lighter weight structure.”
Monaco has responded by redesigning its motorhomes into smaller, more compact products with lower price points. Responding to customers who a few years ago were constantly upgrading to bigger units, the manufacturer has found that same customer is older and now wants something easier to manage.
“Our Holiday Rambler Trip and Monaco Vesta are in the 32- to 35-foot range; the width has gone from 105 to 96 inches and the height is 11 foot, 5 inches instead of 12 foot, 13 inches,” says Snell. “This has had great appeal for consumers constrained by credit, or for older drivers who aren’t as comfortable anymore with a giant 40-foot motorhome. The new, smaller units have great maneuverability and are easier to drive.”
Jayco stresses the quality, ride and drivability of its Entegra line as differentiating factors. The company uses Freightliner and Spartan chasses and Jayco’s own exclusive X-Bridge frame design to provide support and stabilization. This translates to a quieter, more comfortable ride, easier steering and smoother braking, according to the company.
We focus on the purpose of having a motorhome; that is, we focus on ‘getting there as well as being there’ – meaning we put a lot of time and detail into the ride and drive of the coach. When you couple that with the amazing amenities that we offer, you have yourself a wonderful coach that will serve you for many years to come,” says Jenkins.
Still a Market for High-End Diesel Pushers
While the meat of the market for diesel motorhomes remains in the $120,000 to $150,000 range, manufacturers tell RV PRO they are seeing an uptick in sales for the ultra-luxurious $400,000-and-up motorhomes. Statistical Surveys estimates the niche market at about 4 percent of the total diesel market, up from about 1 to 2 percent during the recent economic downturn.
Monaco has confidently reintroduced the Dynasty, a 45-foot, $500,000-plus motorhome that was popular several years ago during the height of the economic boom. In a twist, it debuted in August 2011 at the consumer-attended FMCA rally in Wisconsin instead of the National RV Trade Show in Louisville for dealers.
|Monaco’s Knight motorhome, which is available in 36- and 40-foot floorplans. Monaco officials tout the design and engineering expertise they have as a result of being part of parent company Navistar.|
Floorplans feature as many as five slides and even designer paint packages by Ralph Lauren with “amenities similar to Prevost,” says Snell. “It sold the first day. And there has been a demand for more. Our true test will be the Tampa SuperShow in January 2012. We didn’t build any units like this in the past few years, but now the market is reopening. We are also thinking of launching the Holiday Rambler Navigator in late 2012.”
Fleetwood is represented by its luxury coach division, American Coach. It offers four luxury motorhomes ranging from $384,000 to $804,000: American Revolution, American Tradition, American Eagle and American Heritage. These units range in size from 42 to 45 feet and feature full-wall, 30-inch-deep slides that create home-like living spaces. The American Heritage holds the distinction of the industry’s largest floorplan: 460 square feet of living space.
At $319,000, the Aspire is Entegra’s best seller, but there is a demand for even higher-end units – and for those buyers the company offers Anthem at $417,000 and the Cornerstone at $592,000. At 45 feet, Cornerstone boasts king-size beds, granite countertops, cedar-lined wardrobes, fireplaces, and multiple entertainment centers that would rival any luxury home.
“You are talking about a much higher price; therefore there is a different expectation that goes with each sale. There is a longer sales cycle and usually not a first-time RVer’s unit. It is a much more sophisticated buyer. There are not as many people that can afford to purchase one, so it narrows your field of opportunity,” say Jenkins. “And then (luxury Class A’s) are way more technical, so making sure the customer knows what they need to operate the systems is always a challenge.”
When it comes to luxury motorhomes, the importance of service and quality is stressed by all three manufacturers.
“Service is very important to the end user. We are making a strong presence with our service centers. We are going to have our Oregon and Indiana service centers open for customers who choose to bring their coaches back to us. Our customers want that confidence,” says Snell.
“We offer a two-year unconditional bumper-to-bumper warranty on the coach, which is the strongest in the industry,” says Jenkins. “We do what it takes to make the customer happy.”
The ultimate goal of every manufacturer and dealer is a happy customer. Based upon that, 2012 is starting to look like a year in which the RV industry will have many more of them.