Jim and Terry Golden, two real estate agents in Lansing, Mich., were planning to spruce up their 13-year-old motor home this year. But as they added up the cost of drapery, carpeting and a tune-up, they decided to at least look at new models.
When they got to the dealership, they found new models with new features such as slide-outs - walls that expand when the vehicle is parked. They decided to pay $80,000 for a new model.
The Goldens are typical of the 'trade-ups' who are boosting sales of high-end RVs this year, and bolstering the bottom lines of RV manufacturers. Coachmen Industries Inc., Winnebago Industries Inc. and Thor Industries Inc. all reported record revenue and earnings this year.
'People feel very well-off right now. Consumer confidence is up. They have money to burn, and they are burning it,' said John DeWolf, president of DeWolf Associates, an industry forecaster and consultant group based in Sterling, Va.
Other factors that have buoyed the RV market include the strong economy; the coming of age of a prime RV sales demographic group, affluent baby boomers; and Americans' desire to get out and see more of the country, said John Weiss, vice president of RV manufacturer Fleetwood Enterprises Inc.'s Motor Home Division.
Class-A motor homes are built on truck frames and are typically the largest motor homes on the market. They are frequently used for camping, tailgating at sports events and viewing special events such as automobile races. Some people sell their homes and travel full-time in their motor homes.
And Class-A motor homes are the most profitable RVs on the market. The typical price of a Class-A motor home delivered this year, depending on size and outfitting, was between $54,000 and $193,000, according to the Recreation Vehicle Industry Association, based in Reston, Va.
RVIA said 21,100 Class-A motor homes were delivered through May, up 21.3 percent over the first five months of 1998.
The Freedonia Group, an industry forecaster based in Cleveland, said Class-A motor homes will gain 8 percent by 2003. Sales in the segment that year will reach $5 billion.
Within the Class-A segment, sales of units over 30 feet long are expected to drive the gains. In fact, sales of Class-A models under 30 feet long should drop during the next four years, The Freedonia Group said.
RV manufacturers are working hard to cash in on demand. Coachmen has opened a new factory dedicated to the high-end Santera and Sportscoach Class-A models. By the end of the year, Class-A production should be up 50 percent over current levels.
Winnebago is expanding production of Class-A and Class-C models by 1,000 units per year, a 10 percent increase over current production capacity.
Fleetwood, which holds 27.6 percent of the Class-A market, will not be opening a new plant any time soon, Weiss said. With plants at five different sites throughout the country, Fleetwood can shift products and meet demand in different geographic areas.
Winnebago's Jim Jaskoviak, vice president of sales and marketing, said customer sales are up 20.4 percent so far this year, and the boom should continue.
'I think this industry has a lot of demographic strength supporting growth beyond what we're seeing now,' Jaskoviak said.
A key area of growth included trade-ups such as the Goldens, Jaskoviak added - people like the Goldens who have been in a motor home for a number of years and are ready to get a new one.
'People who thought they had state-of-the-art (motor homes) four years ago are clamoring for bragging rights with the current state-of-the-art product,' he said. Slide-outs are relatively new to the market. Chassis have been improved, making motor homes more stable and easier to drive and maneuver.
The Goldens are typical examples of this type of customer.
Now in their mid-50s, they bought their first Class-A motor home, a used Pace Arrow, in 1988. After looking over the new models on the lot at Walt Michal's RV Center in Belleville, Mich., they traded in their old Class-A motor home for $20,000 and purchased an $80,000 Fleetwood Flair.
They drove their old motor home to the lot the day they took delivery of the new model, parking the two side by side so they could transfer personal items from one to the other.
They planned to spend the night in their new motor home at a local state park. They will try to get away each weekend for a visit to a different part of Michigan. Later in the year, they plan to take a vacation to Florida.