Despite falling wholesale motor home shipments, RV manufacturer Jayco Inc. is preparing to launch its first Class A motor homes.
The Middlebury, Ind., company will introduce two diesel-powered and two gasoline-powered Class A units in May. Jayco's decision to produce Class A's stemmed from dealer and customer demand.
'We started getting reports from dealers that they had lost seven or eight customers because we didn't have a Class A offering,' said Sid Johnson, Jayco's marketing director. 'There was at least one message a day.'
Currently, Jayco makes towables, Class C motor homes and conversion vehicles. Towables account for about 80 percent of the company's unit sales, and Class C's represent about 20 percent. Conversion vehicle sales are fractional.
Johnson expects that within two to three years, Jayco's unit sales will be split evenly between towables and motor homes.
BUCKING THE TREND
But as Jayco's product launch gains momentum, the Class A segment suffers.
'It's hard to argue right now that there's room for another Class A maker, when several Class A makers are having a hard time,' said David Tannehil, senior vice president of Morgan Keegan and Co. Inc. in Memphis, Tenn., an investment firm that follows the industry. 'But six months from now, this market may have turned around.'
The Recreation Vehicle Industry Association in Reston, Va., reported that for the first nine months of the year Class A wholesale shipments dropped 12.6 percent from the same period last year, and Class C shipments fell 10.7 percent.
But Johnson projects that Jayco's 2001 model year Class C sales will total about 1,500 units, compared with 2000 model year Class C sales of about 1,200.
'One of the things that has helped in Class C (sales) is the announcement that we are getting into Class A's,' Johnson said. That announcement was made in February.
PRODUCT LAUNCH PLANS
Jayco's Class A diesels will retail between $105,000 and $120,000, and its gasoline-powered Class A's will cost between $70,000 and $90,000. The new products will be sold as 2002 models.
The company will manufacture its Class A's at a new 130,000-square-foot plant north of its Middlebury headquarters. Construction began in late October.
The plant, which will employ 100 workers, is expected to produce eight to 10 Class A's a day, which is about the same number of Class C's Jayco makes.
Twelve people from the marketing, engineering, sales and design departments are steering the product launch. The team is expected to double in size by spring.
The Class A was scheduled to be launched by the end of November. However, Johnson said construction plans and assembling the product launch team have taken longer than expected.
Jayco, a privately held company, did not reveal how much it is investing in the launch.
To involve dealers early, Jayco has invited about nine dealers to a meeting in Louisville, Ky., on Nov. 30 and Dec. 1. Jayco will ask the dealers for their advice on the Class A designs. If they disapprove, Johnson said Jayco will consider postponing the launch date.
'We do have a few dealers that are skeptical, and I think for the most part, it's because those dealers already carry viable and well-placed Class A motor home products in the market,' Johnson said. 'They're concerned about us getting in the way. But it's not more than four or five dealers.'
Danny Vogt, owner of Vogt RV in Fort Worth, Texas, plans to sell all four new models.
'People are getting used to the higher interest rates; gasoline at higher prices,' Vogt said. 'A lot of the RV manufacturers have scaled down a little bit, so Jayco may be able to come in, and if they do their homework and do their product right, have a very successful launch.'