By Tom Gonser (04/05)
Shortly before posting this editorial, we have published as well an article by our Chief Technical Advisor, Bob Gummersall, that takes a careful and objective look at the true effects of higher fuel costs on the RV lifestyle. From Bob's analysis, it seems difficult to conclude other than higher fuel prices are simply not a major factor in RV ownership -- even at substantially higher levels than the mid-two dollar range that both gas and diesel cost in the current marketplace. Noteworthy is the fact that this article, in its very title, describes the assessment as being "without emotion". While we do not challenge the "objective" conclusion that higher fuel prices arguably should not have a significant dampening effect on RVing, we think it's appropriate to consider another thesis: Even if it is not logical for RVers to react to higher fuel costs, there are indeed significant psychological factors (call them "emotional" if you wish) that may in fact have a chilling effect on the RV lifestyle as we have come to know it over the past decade or more.
Impact of Media Reports
Consider for example the effect of a recent headline in the national news that questions "whether America might be coming to the end of its love affair with sports utility vehicles". Indeed it seems that sales of SUVs may be declining (along with the sales of full size pickup trucks). The reason? It's of course attributed to higher fuel prices. Only a few days later another press release reported the fact that in the past month alone the number of persons seriously considering the new "dual fuel" powered cars had doubled from 4% to 8%.
What is the likely reaction to these types of news reports for some when contemplating the purchase of a new vehicle? Arguably it will influence some to consider adjusting to the "new reality" of higher fuel costs, and to opt for a vehicle that is much more economical to drive. For many contemplating a new vehicle purchase this may not be a "logical" conclusion. But inspired by media reports it may have precisely the effect of changing purchase decisions -- not based on an "objective" assessment, but rather as a psychological reaction to the perception of higher fuel costs. Should RVers be considered immune from these reactions?
The "Political Correctness" Factor
Even when fuel was as much as a dollar a gallon cheaper we began to see a reaction to "gas guzzlers" among some portion of the population. SUVs were thought to be especially "bad", because in many cases these less efficient vehicles were purchased more out of a sense of vanity than real "need" for the four wheel drive capabilities they can offer. No doubt many of these vehicles never saw surfaces more challenging than pavement.
But the demand for these vehicles continued to increase, despite the initial phases of higher pump prices. What was once the primary domain of Jeep and the Ford Bronco suddenly became the hot market that was quickly pursued by virtually all the auto makers. One can now find SUVs in various flavors, including Lexus, Cadillac, BMW, Mercedes, and just about everyone else. But could it be that public opinion may now be turning against these vehicles -- and even more so their owners? And is it possible that with a growing and increasingly strident public opinion that scorns inefficient vehicles it could become akin to "politically incorrect" to own one of these vehicles? This change in the landscape of public opinion may seem either unlikely or unimportant to some. However the world is indeed populated by those who do not want to appear to be out of step with current societal "standards". And these folks are likely to make choices based in part on these types of "appearances". To the extent they do so, market demand for SUVs (and other energy inefficient vehicles) seems likely to decline further -- based in part not on a factor of logic, but one that is essentially psychological in nature. And if this scenario should come to pass for sports utility vehicles, it seems the leap of logic to the impact on prospective RV purchasers might not be far behind.
Concerns about Resale Value
As the "new reality" of dramatically higher fuel prices becomes more visible, and part of our consciousness, is it possible we may begin to wonder about the wisdom of purchasing the type of vehicle that may have a limited resale potential because it is fuel inefficient? As fuel prices continue to escalate (if you buy into the assumption this is likely to happen) might some of us wonder about the resale market for vehicles that can not use, at least in part, alternative energy sources?
If this scenario should be realized even in part in future years, it seems the impact on RV purchase could present a new marketing challenge to manufacturers. High end motorhomes have escalated to price points that take the highest end models into uncharted waters -- but the market has been active, and many of us have been willing to fork over the large sums required to make that purchase. But during this same time the resale market has looked reasonably attractive as well. Granted, no one in his or her right mind would ever purchase an RV thinking it's a good "investment". But so long as prices on the newest models keep going up, and sales at these prices remains firm, there's been a reasonable expectation that resale prices should continue to remain reasonably robust as well. But if the prospect of future fuel prices should at some point dampen the sale of new RVs (including the higher end models), it would seem probable that the resale value of used RVs would turn softer as well. Here too we have a subtle but important psychological factor at work: No one wants to pay a large sum of money for a product that, logically or otherwise, might increasingly be seen as the latest iteration of the "dinosaur" -- or, said otherwise, wants to make a purchase that might potentially be subject to a rapid loss of value.
Fuel Prices Revisited
Just a very few years ago the thought of fuel costing as much as $2.50 per gallon was beyond our general comprehension or expectation. But today we hear speculation that prices may well go even higher -- perhaps a lot higher. Three dollars per gallon seems within striking distance. Indeed the highest we saw on our recent trip up Hwy 395 in the eastern Sierras was $3.19 for diesel. But how about four dollars per gallon -- or five? So far the RV market has been remarkably resilient in dealing with the increased cost of fuel. Indeed, sales have been at record levels in the past year or so. This may have been especially true, on a percentage basis, in the high end market. Perhaps, as Bob so capably argues in the companion piece, RVers recognize fuel costs are not a major factor in the overall cost of RV ownership. But the question remains as to whether at some level of future fuel cost the psychological impacts might indeed pose a significant challenge to the RVing lifestyle.
All consumers are of course impacted by higher fuel costs. Higher transportation costs translate directly to higher prices for virtually everything we purchase, be it food, clothing, or consumer goods. As this reality begins to sink in, many will find that the significantly higher costs of commuting, coupled with higher prices for virtually all goods, translates into a more conscious realization that discretionary income is at risk. And discretionary income is precisely what fuels much of the RV market.
Conclusion: We do not intend to forecast a picture of inevitable doom and gloom for RVers or the industry. In fact we agree with the logical conclusions offered in the tandem piece authored by Bob Gummersall. However we're also of the opinion that consumer preferences and buying decisions are not necessarily controlled by logical analysis. Psychological impacts, some of which may translate to public opinion or irrational buyer reaction, deserve at least our conscious awareness. In the short term we suspect the primary effects on RVers will relate more to subtle changes such as shorter trips, spending more "destination time" and less "travel time", and other relatively easy options to let us continue enjoying our RVing lifestyle while reducing the number of gallons we need to put in the tank. In fact these modest changes can offset the costs associated with increased fuel prices -- so far at least. The concerns expressed above would likely relate to scenarios that include further substantial increases in fuel cost, and/or circumstances where fuel availability is in some manner restricted.