SACRAMENTO, Calif. — In a letter addressed to all RV industry leaders, the California RV Dealers Association today took a position in favor of RV manufacturers adopting equalized freight policies to ensure that no dealer gains a competitive advantage simply because it costs less to deliver an RV to one dealer over another.
“We can be smart about dealing with our problems as the economy begins to recover. The truck and auto industry instituted equalized freight many years ago and it has been a resounding success. What makes our industry any different?” wrote Ernie Friesen, president of CalRVDA, and Terry McHale, executive director.
“CalRVDA has a simple solution to the driver-delivery problem that is plaguing the RV industry,” the letter read. “The answer is ‘equalized freight.’ If the RV industry instituted an equalized freight policy we could virtually cut the cost of freight from Indiana to the West Coast nearly in half.
“Once the cost per mile has been factored, you could then add a reasonable amount to this cost per mile factor to make it advantageous for drivers to haul trailers again,” they explained. “Manufacturers would eliminate huge inventories of towables sitting in their yards and dealers would have inventory at the dealerships to sell to the consumer.
“The last increase in delivery costs per mile occurred approximately one month ago and resulted in an increase of $500 to the West Coast,” the letter noted. “We are now pushing $4,000 to deliver a trailer to the West Coast and this cost will continue to go up over time to the point where west coast dealers will not be able to carry any product built in Indiana.”
CalRVDA advocated two ways to resolve the situation:
- Equalized freight
- Build on the West Coast
“We are confident that once a proper cost accounting analysis is completed, you will find that not only is it easier and less expensive for the manufacturers to implement equalized freight, it also gives the manufacturers more control with transportation from Indiana to anywhere in the United States,” the letter noted.
“Another positive for the manufacturer is MAP pricing,” the letter explained. “We all pay the same so it really comes down to the dealer, the sales staff and the training. With the current situation, a west coast dealer appears to be ripping the customers head off when they see our price against a midwest or east coast dealers. Do manufacturers really like regulating MAP pricing?
“We are not only competing among ourselves for the recreation dollar, but also with cruise lines, boating, timeshares and other destination travel for the consumer vacation dollar,” they explained. “We are sure there are Midwest and east coast dealers that would not be pleased with equalized freight, but I believe this is the only solution if the RV industry is to remain healthy.
“For this to work, manufacturers would have to stop factory pick-ups by dealers. Some RV manufacturers are already utilizing equalized freight in their delivery process to dealers,” the added. “Let’s make this an RV industry-wide program.”
SOURCE: California RV Dealers Association memo