As we turn the page to a new calendar year it seems timely to reflect on issues and trends that we noted during 2004, and to consider how they might impact RVers in the coming year. No one has a crystal ball that conjures up "right answers" here, but surely we can benefit by analyzing current items that will affect the RVing public in the near future.
At first glance one might suspect that escalating fuel prices would have the largest impact on RVers and the RV industry in 2004. It would seem logical that as the cost of driving an RV goes up, the popularity of RVs and RVing should decline. But that seems not to be the case, as RV sales soared during the past year. A short time ago $2.00 for a gallon of fuel -- gas or diesel -- seemed beyond the level of tolerance. Yet prices for both soared well beyond the $2.00 mark in most locations, and then retreated a bit. When the prices went "down", they somehow became more palatable. We've now been through a couple of cycles of rapidly increasing fuel prices, followed by a modest retreat that somehow caused the post-peak prices to look more acceptable. Each of these rounds of increases, followed by a slight retreat from the highs, has raised the bar on what we're willing to pay for fuel. It seems that a combination of a growing "acceptance" of a higher level of fuel prices, coupled with the a growing market demand spurred by the baby boomers, has combined to accelerate the growth of RVing despite the large increases we've experienced in fuel cost these past few years. Whether insensitivity to increasing fuel prices has an upper limit is yet to be seen.
We've also heard some explanations for our acceptance of higher prices for gas and diesel. Many have pointed out that despite the higher prices, the cost of fuel is not the most significant expense of owning an RV. Indeed, for most RV owners the costs of depreciation and maintenance are often more substantial than the expense of the fuel used. Others point out that despite the higher cost of fuel, RVing still offers a more affordable option than paying for motels/hotels for accommodations, and patronizing restaurants for every meal.
Whatever the rationale may be, the plain fact is the past year saw both considerably higher fuel costs, and a substantial growth in RV sales. And it may be that the growth of RV sales, not fuel prices, will present the greatest challenge to RVers over the coming year. Let's explore that thesis...
While there is little objective non-industry sponsored survey data that measures the reasons for satisfaction and dissatisfaction among RV owners, doubtless most would agree that two primary sources of concern among RVers are (i) the overall quality of RV units, and (ii) the lack of accessible, timely, competent RV service. In fact these two concerns are the opposite sides of the same coin. Because RV quality is generally perceived to be below acceptable norms, the demand for service and repairs is so substantial that it's begun to outpace its availability. When we purchase a new car we expect the unit has undergone a process of stringent quality control during the building process, that everything has been thoroughly checked prior to delivery, and that it is unlikely we will experience problems with the new vehicle once we complete the purchase.
Compare that to the purchase of a new RV. Despite manufacturer claims of rigid quality control, most purchasers of new units are well advised to have a service appointment scheduled for warranty repairs within the first week of taking delivery. In many cases owners will have a long punch list of items they discovered in the first hours and days of ownership that required service or repair. If a new car buyer discovers a problem needing attention, in most cases he or she can have a cup of coffee in the waiting room while the item is quickly fixed. But in the case of the new RV, the owner all too often discovers that it will take days -- sometimes weeks -- to get all the punch list items successfully addressed. Those that question this assessment need only visit the customer lounge of a manufacturer's service facility and listen in on the chatter of recent RV purchasers.
Many veteran RVers have concluded that they will avoid purchasing a new RV because, until the original purchaser has spent a year or two in a number of service facilities to "work out all the bugs", it's not really "ready". While first year depreciation is a deterrent for many, whether it be a new car or a new RV, surely it is uncommon for the purchaser of an automobile to avoid "buying new" solely for the purpose of letting the original owner "work out all the bugs".
Admittedly we can't fairly equate the purchase of a new car to the purchase of a highly sophisticated modern RV, which is the rough equivalent of a high tech home equipped with not only systems of incredible complexity -- but wheels (and somtimes lots of them...). It may be that with the growing customer-driven demand for ever more complex toys and gadgets, post-delivery problems with finshed units is inevitable. We don't propose to engage in that debate, other than to suggest that manufacturers have legitimate contentions here as well. Rather we'd simply point out that regardless of cause, many new RVs tend to have a significant level of service issues at the time of delivery.
To the extent this conclusion is accurate, we need to add the growing and related concern that RV repair and service is becoming ever more difficult for most RVers to find. Whether it be a manufacturer, a dealer or an independent RV service center, RVers are finding it can take weeks -- and sometimes even months -- to even schedule a service appointment. And for reasons that are beyond the scope of this writing, the ability of RV service facilities to offer competent technical assistance -- and a first time fix -- seems increasingly rare. This is not a new phenomenon, though its impact is arguably being perceived as a more severe problem as the number of RVs on the nation's highways increases.
Quality control and access to timely and competent service are both items that have dots connecting to the phenomenal rate of growth in RV sales during 2004. When RV manufacturers ratchet up production to meet the growing demand for new units, they necessarily have to hire and train new production workers. With production workforce numbers in some cases increasing by as much as 50% or more, it's obvious that the task of maintaining high standards of quality control using well intentioned but inexperienced personnel is going to be extremely difficult. And with the number of new units produced increasing sharply, the strain on the existing RV service infrastructure is obvious. It seems unavoidable that quality control on many new units will be compromised, and that an increased portion of the manufacturers' and dealers' service capabilities will have to be allocated to what they consider "priority" work -- the warranty work required on new units. What does this mean for the rest of RVers who are driving out-of-warranty RVs? Obviously it means that an already difficult problem of finding timely, competent RV service will get just that much more difficult.
One apparent bit of relief is that many manufacturers are gearing up to provide an increased level of factory service support. But this may prove illusory if the increased service capability does not at least match the increase in production. If a manufacturer projects a 30% increase in the number of new units delivered annually, and is planning to ramp up service capacity by, say 20% over the same time period, there is actually a net loss of service support available for owners of that brand. The problem is built into the plan.
The RV industry is enjoying unprecedented success with the increased popularity of RVing in the past decade. While this may be due in part to anticipated demographic changes and trends in geopolitical events, it is due also in part to the manufacturers' ability to provide new products that respond to buyer preferences, and enhance the RVing lifestyle. But logic suggests that there are potential limits to the current industry successes. If the level of RV consumer satisfaction becomes seriously eroded because of inadequate manufacturing quality control, and the growing inability to find timely, competent RV service for both new and existing units, the appeal of the RV lifestyle can be undermined. Ownership of an RV could come to be viewed not as a ticket to fun-filled adventures, but rather as an invitation to a lifestyle that revolves primarily around endless (and costly) days and weeks of frustrating experiences at RV service facilities. This would have negative consequences for the growth potential for the industry. And we think that is precisely the challenge that confronts both manufacturers and dealers in the coming year.
In our view, for those planning to purchase a new unit in 2005 one of the most crucial considerations should surely be the current reputation of a given manufacturer to deliver quality -- with minimal defects on delivery of a new product. And the obvious related concern is the ability of the manufacturer and/or dealer to provide competent, timely service -- both while the unit is under warranty, and thereafter. Those manufacturers and dealers that have a demostrated commitment to increasing service capacity at a rate that meets and hopefully exceeds the sale of new units deserve the special attention of this year's RV buyer. Never has a company's reputation for customer support, for both its new and and pre-existing units, been more critical to a buying decision.