Part 1 of the 3-Part Series | In our latest video series, “Brett Talk,” NIRVC President and CEO Brett Davis shares insights on the RV industry. First topic: inflation! And its disproportionate effect on the motorized RV industry.
It’s crystal clear that the RV lifestyle is very popular here in the United States. Since 1980, the RV industry has grown 450% times faster than the population. Considering that new industries and disrupters are created every day, it’s quite impressive that a 65 year old industry is still growing 4.5 times faster than the population.
Now, when we isolate towables as their own segment of the industry – manufacturers shipped 78,468 towable units in 1980 – growing to a peak of 554,058 by 2021. This is a compounded annual growth rate of almost 500% faster than the population!
On the contrary – motorized RV production reached its all-time high way back in 1984! That year, manufacturers shipped 81,992 new motorhomes. (This number comprises all Classes: A, B and C.) By 2022, motorhome shipments had fallen to just 58,410 units, which is its current cyclical peak. In Wall Street lingo, motorhomes have had six “dead cat bounces” since its all-time high in 1984: meaning, with each business cycle, there have been lower highs AND lower lows.
From 1984 through 2021 (the year the RV Industry as a whole reached its all-time high), motorhome production and shipments experienced a compounded annual negative growth rate of -0.92%.
Think about that for a minute. The population grew at a positive 0.97% per annum, while the motorized RV industry shrunk almost just as fast, at a negative -0.92%. But, now to add insult to injury, motorhome production lost serious market share as well, falling from 38.01% of all RVs manufactured in 1984 to just 9.36% by 2021. A stunning 75.4% decline in market share!
Why is it the exact opposite ratio in Europe? Why do 90% of Europeans own a motorhome and only 10% own a towable? Historically, on average, over this same period of time, gas was 43% cheaper here in America than it was in the UK, and diesel was 54% cheaper.
On a relative basis, motorhomes also have become more affordable since 1984, despite their decline in sales and market share. The fact motorhomes are more affordable today than they were at their peak in 1984 doesn’t explain their 38-year decline in sales and market share.
Be sure to watch the entire video as Brett takes a look at the past 43.5 years of RV shipments, identifying through actual sales data how easily once can see when overbuilding (excess supply) or under-building (excess demand) is occurring….(read more)
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Brett Talk: Inflation, RVs & Truths About Motorhome Industry Decline
The motorhome industry has been facing some challenges in recent years, and there are a few key factors contributing to its decline. In this edition of Brett Talk, we will delve into the issues of inflation, rising costs, and changing consumer preferences that have had a significant impact on the motorhome industry.
One of the major contributing factors to the decline in the motorhome industry is inflation. Inflation is the increase in prices of goods and services over time, which subsequently reduces the purchasing power of consumers. As the cost of living rises, individuals and families have less disposable income to spend on luxury items like motorhomes. This shift in consumer spending patterns has directly affected the demand for motorhomes, resulting in a decline in sales.
Furthermore, an increase in the cost of production has also played a part in the decline of the motorhome industry. Raw materials, labor, and operational expenses have been escalating, thus driving up the overall cost of manufacturing motorhomes. These increased costs are often passed on to consumers, making motorhomes even more expensive and less affordable for potential buyers.
Additionally, changing consumer preferences have also impacted the motorhome industry. In recent years, there has been a shift towards alternative forms of travel and accommodation, such as van conversions, camping trailers, and even the booming vacation rental market. Many consumers are opting for more affordable and versatile options to meet their travel needs. This shift in preferences has led to decreased demand for traditional motorhomes.
The decline in the motorhome industry is not only affecting manufacturers but also the related businesses and the communities that rely on the industry for economic stability. Motorhome dealerships, repair shops, and campgrounds are all feeling the effects of reduced revenue and are having to adapt to the changing market conditions.
However, it’s not all doom and gloom for the motorhome industry. There are opportunities for adaptation and growth amidst these challenges. Manufacturers can explore technological advancements and eco-friendly options to attract a new generation of buyers who are conscious of sustainability and efficient travel. Furthermore, the rise of digital nomads and remote work could present an opportunity for motorhome manufacturers to target this market by creating mobile office spaces within their vehicles.
It is essential to acknowledge the truths about the motorhome industry decline, as this will facilitate discussions and strategies to overcome the challenges faced by manufacturers and other industry players. By understanding the factors that have contributed to the decline, stakeholders can work together to find innovative solutions to revive the industry and appeal to the evolving needs of consumers.
In conclusion, inflation, rising costs, and changing consumer preferences have played significant roles in the decline of the motorhome industry. However, with the right strategies and adaptations, the industry can still thrive. Manufacturers, dealerships, and related businesses must remain open to innovation and exploring new market segments to ensure a promising future for the motorhome industry.
EDITOR'S NOTE: At 22:06, the increase in price for a second Florida home is actually 606%
RV's are made so cheap they should be ashamed! Maybe the ones that cost hundreds of thousands of dollars are good but the ones under &100.000 are junk!
We will only buy from NIRVC. We have to sell our class c first because we could not get a good trade in value for it. I hope it sells quick so we can get on the road full time after buying a motorhome from NIRVC.
I am the owner of the RV Driving School, and want to thank Brett for this first overview of the RV market. We provide a service to the industry that provides a level of security to those who are desirous of the larger RVs, but are concerned about whether they can feel comfortable driving these vehicles. For over thirty years, and with a staff of over 100 instructors, we pride ourselves on instilling the confidence that folks need that they can handle the motorhomes of all sizes. We have had an active involvement with your stores, teaching your valets how to safely negotiate moving RVs at your dealerships. I would add we put on seminars and behind the wheel lessons all over the U.S.
My guess is that people are buying trailers to live in as their primary homes, so need the motor (their truck) to drive around in their day-to-day affairs. Bidenomics is a disaster and many "middle-class" people are struggling. People at the top are doing fine as are people at the bottom (propped up by government subsidies). The middle are feeling the squeeze the most.
Your correlations were interesting — but I wonder what the correlation would be to inflation adjusted median household income
Our first unit was Winnebago that we "borrowed" from my parents. We took 3 trips and after attending the Florida RV Super show, we are on our second Entegra Anthem. For us its simple. We have a clean bed, hot shower, fully stocked frig and whatever we want to watch on the Satellite or streaming TV show. Heated floors and AC that keeps us comfortable, along with no concerns on our dog. After you talk with a non RV owner about the costs and time involved to travel by air or driving, staying in hotels and eating out every day. Verses driving and seeing the sites, stopping as we desire, home cooked meals and no stress as we take our furry friend(s) with us. Along with having our own clean bed, shower and washer/dryer. Others seem to have a greater desire to consider the RV travel conveniences. Simply put we didn't consider owning an Entegra as a cost, but an investment that granted us convenience and cost savings.
Okay Brett, I give up. You dispelled every thought Duane and I have had on this subject! And you taught me a thing or two also! Please don’t make us wait too long for videos 2&3!
Thanks for a great video and analysis. I’ll look forward to the next!
Great Explanation. Brett always does a great job of explaining and providing insight.
One correction – at 22:06 – there is a exhibit that shows the price increase of a Tiffin vs Florida Home. The calculated increase in the Florida Home Price is not correct. It should be 606%, showing that motorhomes are an even better value versus a second home from 1984. Looking forward to your next video!
With the proliferation of pickup trucks as daily drivers for many, I just wonder if people feel they don't need another motorized vehicle. They can simply hook up to a towable with the vehicle they already have and save themselves a tremendous amount of money. The most luxurious of towables tops out around $200k for the most part. That's a lot of money to be saved. I also believe that towables are becoming a more common place option for full time living, as well as a 2nd home option for "snow birds".
I love hearing your perspective.
Very interesting information. We've been RVing for a while. Amist all the info/feedback from folks on the topic, I'd say one of the issues is knowledge of and about RVing. Lots of folks that may want to do RVing don't really understand how to begin. First they need to know the kind of trips or vacationing they want to do, how they could use an RV, when they can use it, where they can store it, and most of all, how to use it, no matter if it's a TT, FW, or Class A, B or C. Sure, some have friends with an RV or a friend of a friend that has one and when questions are asked, the feedback can be good or bad which can lead to interest in or no further interest at all. Sure, there are going to be problems with an RV as with other things we pruchase, but at what cost. Breaking down on a family trip in your RV is not fun, especially if the dealership doesn't want to help and pushes the problem off on the manufactor and the manufactor is pushing it back to the dealership, all the while you're still broke down and can't get your family and RV back home. Not going to get on a soap box but hopefully the picture is painted. The input to RVing and how much fun it is and/or can be comes from the folks that have purchsed them and are happy to pass on that experience to other, but the demise of RVing can come from the folks that are not overly happy with the issues listed in the comments and then some.
For me, the answer is simple. I would not own my RV if it were not for NIRVC. NIRVC takes all of the headaches out of owning an RV. Brett, you are a first class individual and you run a first class RV facility. You changed the RV industry in BIG way, for the better.
I have owned 8 motorhomes over the last 20 years and am selling my current 2018 Newmar Dutch Star 4369 through NIRVC. Several things I will note in my decision to give up RVing:
1. Quality has suffered,
2. Service is terrible,
3. Wait time for service is una capable,
4. Depreciation, service and operating cost eat you alive.
We currently have a 35 ft motorhome and are considering an upgrade. What is holding us back? Unable to get service done at a reasonable price and time frame. My opinion is that until the service part of owning a MH is fixed the sales will continue to lag.
Well presented and articulated. Seems a multi-factorial problem.
The breadth and depth of your analysis is outstanding.
My recent experience in purchasing a new luxury class A diesel pusher is in my view a major contributing factor in the destruction of that segment market share.
The class A segment seems to be broken. Quality control is virtually non-existent. Dealer support is nearly non-existent.
The only bright spot in the class A segment is NIRVC!
As a full time rver the state of quality control is exponentially complicated.
We're in the 18th month of ownership of our new coach and having lost nearly 6 months of usage during that because of warranty issues is an unacceptable ownership experience in my view.
Unfortunately my experience is the norm.
If the industry doesn't make a major course correction in the class A segment the future is not bright.
Long term statistics present one picture, Brett, but near term see, to play a role. In 2014 the MSRP on a Cornerstone was ~$523K. The price on a 2023 Cornerstone was just South of $950K. Similar price increases can be seen, I believe, down the lines of DPs. This would suggest that in a relative shorter period of time, the cost of DPs has become a significantly larger portion of average income. In addition, comparisons to vacation homes is a bit dubious as those homes have seen a significant increase in value while motorhomes depreciate significantly. Pls don’t misinterpret…I think I probably see where you’re headed in this discussion; however, a third factor might have an impact. A significant market share for higher end motor coaches are in the senior households where people rely on pensions and investments for disposable income…a two edge sword in that investments soared over those 8 years, but inflation-based adjustments to retirement pensions are significantly lower. Fear of the future value of investments versus inflation/interest rates/depreciation are intangibles that sort themselves out over the long term, but in the near term affect the market. The one thing that doesn’t adjust downward is the cost of purchase of a new DP and the total cost of ownership (I think, though I don’t have the hard numbers). A good video, but as you say, the assumptions drive the argument.
Thank you for this series of videos. You only use the fixed costs of rv ownership in your analysis. Could the variable costs of class A ownership help explain the decline?
It is interesting that in California the number of class A motor homes is closer to 20% compared to nation wide. Maybe we can use our class A motor homes year round and family incomes are higher but what about our diesel fuel prices of over 6$ a gallon. I am not 100% sure if the numbers match but have read and talked with RV persons on those numbers.
Interesting presentation…I also used to utilize a lot of pertinent data in my business decision-making. As a first-time buyer of a class C back in 2018 ($100,000 investment)…I was very close to purchasing a new 2021 New Aire ($500,000.) At that point, prices were at all time highs and I backed off. Then over the last couple of years, inflation has taken its toll…even with 25%+ discounts off of MSRP. That makes buying an expensive luxury item even tougher. So my opinion is that the cost of entry in the DP class has just gotten so high that only rock stars and very wealthy people can buy new units. And a close second is that with so many "bells & whistles" on todays units (both chassis & coach) the build quality is a big gamble even with quality manufacturers like Newmar & Tiffin. Imagine purchasing that $500K new home and then being told you can't use it for 3-4 weeks while you wait for a major repair to be made…that happens. You don't see that happening with a quality auto manufacturer but very rarely. (I realize a motorhome is a tin can on wheels but….) As a former business owner, I would like to see overall sales in dollars (not just units) since there has been substantial price increases over the years. Does the Class A DP market look as bad comparing actual sales and not just units? Thanks for what you share with the industry.
Thank you for the very interesting comments on the industry. Many of the facts were new to me. I never realized the motorized market was declining. I am wondering how the number of used coaches still in use affects the market?
Interesting stats. It does seem a mystery as to why the class A has the exact opposite growth than the other portion of RV’s. Enjoy your views. Can’t wait for the next update
You have a lot of great points.
1. The quality of RVs combined with the ability/complexity to repair would be one reason.
2. The population growth in the US is mainly in the cities with HOAs and rules, making storing a class A more of a challenge now vs the past.
I wish you all had a location in central Ohio as the quality and professionalism of dealers here leave me not feeling confident about my experience after the sale. Please look at the northern columbus area. Sunbury/Galena area. It would be a great place to expand for you all.
Thank you for the video!
Very interesting comments that you make. Can’t wait to here the others. At 66 years old I have saved up a very nice retirement nest egg. Got more than enough income coming from investment properties and Social security to purchase any rv I want. For the last several years I have been wanting to trade up from a 5th wheel to a Newmar Dutch Star. What’s hold me up? Just not wanting to take the lost in devaluation of a new unit. Even though I have the cash to spend, do I really want to do that bad investment? Now after seeing the new Brinkley 5th wheels (and I already have the F350) I realize I can spend 4 times less and still have the same amount of fun. But deep down I want a class A.
So eye opening.. BRETT thank you for helping all of us see how the RV industry sales decline over the years. But why? The true story. No one but you would take the time to help us understand the reasons yes reasons, I believe it has to be more than one situation that as affected the sales. It will be interesting to see why in the next few videos. As you know l have a true interest in the Disney overview for 36 years back to 1985. Yes a long list of STUFF drove Disney price up over the time frame you referred to. It will be interesting if it’s some of the same in the RV industry. Thanks again for sharing.