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RV Industry Death Spiral – Part 2: Manufacturers in race to the bottom

RV Industry Death Spiral – Part 2: Manufacturers in race to the bottom

When it comes to RV manufacturing, it is clearly evident that the race is on – a race to the bottom.

Manufacturers are competing intensely against each other to produce RVs that are built cheaply, with cheaper components so they can be sold at what I call the “mythical price point.”

The mythical price point is that price at which RV manufacturers, and in some regard dealers as well, believe is the absolute highest price consumers are willing to pay for a recreation vehicle. Add one more quality component and RVers will run away.

For example, a 360 Siphon is an effective $10 part that can eliminate RV odors, which people who actually use RVs know is a consistent problem. But, many manufacturers won’t install the simple device. Why? It will push them out of the mythical price point.

RV makers do spend a lot of money on bling, the flashy things that people readily see when they walk through an RV. But, they don’t seem interested in installing the best quality products to support the RV infrastructure.

Consider these examples:

Christopher and Kimberly Travaglino are the founders of Fulltime Families – a group that boasts of nearly 1,200 dues-paying members plus 12,000 very active Facebook followers.  They own a 2008 Heartland Cyclone, which they bought used.

Earlier this year, they discovered that although their RV label says the vehicle is rated to hold 18,000 pounds, the three axles on the rig were rated for 5,200 pounds each. So, in reality, their 18,000-pound RV could only safely hold 15,600 pounds.

I met Skip and Sara Shute at an RV rally about 18 months ago. They were investigating the RV lifestyle and hoped to hit the road with their four children on a full-time adventure. They were researching RVs and talking to people about the RV lifestyle. Late last year, they eventually settled on a brand new Fleetwood motorhome.

Within months, they had 101 documented problems with the RV and reams of emails back and forth between the dealer and the manufacturer trying to get the issues resolved.  What a way to start the adventure!

Matt Smith, my technical partner who keeps our websites running, owns a 2016 DRV Elite Suites Manhattan fifth wheel. A short time after buying it, the family found the basement compartments full of water in its first week of use.

The builders had not secured the pipe coming out of the main level bathroom shower so that it remained attached to another pipe leading to the holding tank. After the rig bounced around a bit, the pipe popped out of place. Whenever their son used the sink or shower, the water would flow directly into the basement compartments.

After they got that problem fixed, one of the stabilizers kept dropping while the rig was being towed. Fortunately,  they noticed it in time so that the stabilizer didn’t hit the ground, break off, and get kicked back into oncoming traffic. But, to get it fixed is a two-day job because the hydraulic cylinders are trapped behind a bunch of other non-serviceable parts and equipment that need to be removed first.

The last thing an RV owner wants is water damage within the first month of use. Well, except for a broken frame.

A blogger of mine, Dana Ticknor, with the full-timing Ticknor Tribe, purchased a 2015 Crossroads Elevation fifth wheel. But when a wall in the upper bedroom developed a crack, and they could no longer move the slideout, they took it to a dealer who discovered the frame was flexing. The tech also discovered the slideout motor was held in place by a single screw.

To further exacerbate the problem, the designers had configured the upper bedroom door so that it could only open when the slideouts were extended. With the slides in, the door wouldn’t open to allow access to the bedroom.

So, when the slideout broke, the family had to hoist their young son through the bedroom window so he could squish through the wardrobe and take the door off the hinges, so others could get in and push out the slide.

These are just people I know personally who have had problems in the past year or so. There are literally thousands of other stories of similar problems with RVs.

Don’t buy new

Look on any consumer forum anywhere on the Internet and the advice regarding the purchase of new RVs is consistent – don’t buy new.

People who bought a new rig often had their adventure delayed for 24 months because the RV was constantly in the shop correcting dozens of problems. And that’s only if the RV dealer could correct the issues in the first place. Most RV technicians don’t have a clue as to how to repair significant structural issues with the RVs sold at the dealership and the problem is punted back to the manufacturer.

Manufacturers need to change their marketing message. Buy this new RV and your first vacation will be in beautiful Elkhart, Ind., as you bring the RV back to the factory to get problems fixed. The problems requiring factory repair are so prevalent that RVers forced to go this route must make an appointment months in advance to get into the factory. That takes a bite out of summer fun.

Every RV manufacturer I talk to will boast of having the best, most comprehensive quality control standards in the industry—and some really do. But, then why is the failure rate through the roof? Literally.

Kimberly Travaglino told me about the heartbroken family who was camping in their brand new travel trailer a few months ago. They had picked it up from the dealer earlier in the week and were on their first-ever camping adventure. On the trip from their home to the campground, the roof literally peeled back exposing plywood.

I’m sure the RV will be repaired in time for use next camping season.  But, hey, don’t worry, it’s covered by warranty.

Warranty woes

In the race to the bottom, RV manufacturers have cut production costs to the core to build units as cheaply as they possibly can so they can be sold as inexpensively as possible. The lowest priced RV wins the game.

The problem with this business model is that there isn’t enough profitability built in for the manufacturer to cover the enormous costs of repair to correct problems with the products they build. EverGreen RV just went out of business due to an enormous number of buybacks and warranty claims. But, hey, they sold a lot of new RVs!

Without enough money to cover warranty costs, the RV manufacturer has no choice but to either deny claims or short-change its RV dealership partners when it comes to reimbursing the dealer for completing the repairs. RV owners, do you wonder why RV dealers won’t provide service unless you buy the RV from them? This is why.

It is a source of contention that is getting worse every year. In fact, one dealer told me this week his company lost $500,000 in two years in unreimbursed warranty costs.

I told him that it’s time to find a new partner, but was told in reply that all RV manufacturers are guilty of playing this game – at least the manufacturers the dealership works with.

It is beyond frustrating for consumers to be told that their warranty claims are being denied within the warranty period. It’s worse when they need service on the road and the dealerships insist they pay for the service upfront and submit a claim for reimbursement from the manufacturer.

It’s even worse when the consumer buys an RV with a one-year warranty, but only gets to use the RV two or three times that year because it’s in the shop the rest of the season. As a result, many problems aren’t detected until long after the limited warranty period expires.

Read Lori Magee’s story, as she relayed it on Facebook a few months ago:

“Our warranty ended November 2013. Our Dutchman 2013 Voltage 3200 was in for service due to constant blowouts which caused damage to the RV. When the lower skirt panel was removed, the technician noticed damp wet wood. When removing the corner moulding that wraps all the way to the roof, it was discovered that during the manufacturing process Dutchman cut the rubber roof material short and simply filled in the area with roof sealant.

“When we attempted to resolve this with the company, they simply said ‘Sorry, it’s out of warranty and your fault due to lack of maintenance.’ Now, unless we had to have it in for service to repair damage caused by several tire blowouts, we would have never seen this issue until it was too late.

“ I am a very unhappy consumer right now. This RV had a manufacturer’s suggested retail price of over $100,000. They will not even send a rep out to LOOK at it and are very quick to point the finger to us.”

In other words, when buying an RV, a consumer needs to pay someone to peel back the roof before the warranty expires to ensure that it was constructed properly. Isn’t that the message being sent?

Dealer relations in the toilet

There has always been some friction between RV dealers and manufacturers. It is natural that both want to make as much money as possible – that’s business and it is how companies survive.

But, in talking with RV dealers, I don’t think the relationships they have with their manufacturing partners have ever been as bad as they are today. And that says a lot considering that manufacturers were pretty tight fisted during the great recession for obvious reasons.

This is a prime example of what happens to an industry when it is controlled by monopolies. Yes, the relationship goes both ways and we’ll cover dealership issues in another column.

But, dealers are telling me the pricing games, product quality issues, inability to get parts and downright refusal to take responsibility for warranty work is undermining the essence of a cooperative business partnership.

Nobody likes to be the bad guy and tell a customer that something can’t be done. But, it is the local dealer who is on the front line serving the manufacturer’s customer. It is a symbiotic relationship in that manufacturer, dealer and customer are all essential and equal partners in a sales transaction. Without one, the entire transaction can’t happen.

When a manufacturer 1,000 miles away can’t deliver a part to an RV dealer for weeks at a time, it’s the dealer who looks incompetent in the eyes of a consumer. Consumers know full well that there are overnight delivery services – and they are often willing to pay money to get the part fast so they can use their RVs again.

Imagine how stupid the dealers look when they finally tell a customer, “Yes, the manufacturer called and is shipping the part today. It will be here Tuesday. We’ll need two days to put it on, but you’ll be ready to go camping on Friday for sure.”

Then, when the part arrives on Tuesday it is discovered that it is the wrong one for that brand, or model year  or model type because that particular RV was built on a rainy day in April when the line ran out of X component and scrambled to jerry-rig a Y component into its place instead.

Nobody at the RV manufacturing plant understands the rage and invective hurled at RV dealership staff by frustrated consumers who imagine a conspiracy is underway to prevent the RV they bought from being fixed.

Dealers are in a tough spot, thanks to consolidation. If they bark too loudly, they risk having the manufacturer find an excuse to pull the brand off their lot and give it to another dealer in the area. Once blacklisted by one Thor brand, can a dealer reasonably expect to be able to take on another Thor company’s products? Doubtful.

If a dealer is blacklisted by both Thor and Forest River, they’re left hanging out a consignment sign and making a living selling aftermarket products and repair services – but not as an authorized warranty dealer, you can count on that.

Model year games

This is an area that might be getting better with the success of the Elkhart Dealer Open House event in September, and that’s the problem with model year introductions. At least now, most new RVs are being introduced in August and September.

Everyone likes new things. Manufacturers like to be seen as being the most innovative company on the block. Dealers like to promote the arrival of new RVs on their lots and consumers don’t need much excuse to go checkout new RVs as well.

However, the problems with the timing of new model introductions extend far beyond the marketability of introducing a new product.

The first problem is that dealers get screwed out of thousands of dollars. Imagine buying three 2016 model RVs in April only to have the manufacturer suddenly introduce 2017 models in May. It instantly devalues the cost of the 2016 models.

Even thought the 2016s are in fine shape, have never been used and are worth the price, dealers must discount the product because banks won’t lend as much on a 2016 when the 2017s have been released, and consumers expect a deal on older units when the new models are parked close by.

Funny thing is, the units are often the same RVs with different model year stickers. Sure the interior design might have changed a bit, but the floorplan is essentially the same.

Consumers are also baffled as to why a 2017 RV is built on a 2016 chassis.  I’ve had several owners contact me wondering if something illegal is taking place because their owner’s manual says the RV is a 2016, but the service center tells them the chassis was built in 2015 or even 2014.

Carry capacity

“Lightweight.” That magical word conveys the idea that a Prius can tow a 35-foot travel trailer. Almost every manufacturer boasts of having lightweight RVs that can be towed by vehicles the buyer already owns. Many dealers sell that idea to consumers who find out later it’s a lie and that they really need to buy a new $50,000 truck to pull their $50,000 travel trailer.

But, lightweight is the “in” thing. So how do manufacturers make RVs “lightweight?” By using cheaper, lighter building materials and installing cheaper components, too. Why use plywood when cardboard looks just as good?

Manufacturers also build RVs with lots of drawers and cabinets so that consumers think they can bring a bunch of stuff with them. But the lightweight units don’t have a weight rating to allow the RVer to bring much equipment with them in the RV. So the RVer often drives an overweight vehicle that creates an accident risk.

It doesn’t just impact towable RVs. A few years ago, another blogger was writing about her Fleetwood motorhome. After the family bought it, they discovered it could carry everything but people.

When the weight of full fuel tanks, fresh water tanks and propane tanks were taken into consideration, the difference between the gross vehicle weight rating and the actual weight of the RV was just 400 pounds – and people, food and dishes were not yet accounted for in the equation.

Sometimes manufacturers go overboard in trying to make the RVs look “homey.” Winnebago last year offered a motorhome that had 13 pillows on the bed. Oh, it looked so cuuuute, but they literally took up half the bed.

Attention RV designers – when you live in 400 square feet of space, there isn’t much room to store things. So, exactly where do you expect people to store 13 pillows when they intend to use the bed? After about three nights of dealing with that problem, your average red blooded American guy is going to hike to the camp store and buy two Hefty garbage bags and throw all the beautiful decorative accent pillows into the nearest dumpster.

People who develop interior and exterior decoration schemes for RVs must all graduate from the same designer school. Can anyone else explain why they all look almost identical regardless of manufacturer or brand? You have a dark brown or light brown woodworking with light tan or white walls. On the exterior, you can have a choice between red and blue swirls on white, or brown and beige swirls on tan.

Where does it end?

Walmart plastic shopping bags perform two vital tasks – getting groceries from the register to the buyer’s car, and then from the car into the house. After that, if they break, who cares?

Many of today’s RV manufacturers approach construction the same way – build the RV strong enough to get to the dealer and last long enough to get off the dealer’s lot. After that, who cares?

Gary Motley, a well-regarded RV service technician based in Oklahoma City, often says in a distinct southern drawl, “RVs ain’t for using, they’re for fixing.”  He is right in so many ways.

This year, I am spending $1,135 per month on repairs to my motorhome. Last year, it was $286, but in 2016 I am repairing some of the same problems fixed last year. Every RV owner I know maintains a running list of repair items. After visiting a dealership, service center and the Winnebago factory already, I still need to have the furnace fixed and fuel pump replaced.

The fuel pump will be $1,800 for repair because the entire tank has to be dropped in order to access the fuel pump.  Many of today’s RVs aren’t built for future service in mind.

RVs today are built to be fixed and stored.

Without drastic change, I don’t see this improving anytime soon. With 83 percent of the RV market controlled by two corporations, there is no incentive to truly innovate or improve customer service. If you want an RV, you have Company A or Company B.

Thank goodness there are a few Company Cs providing pressure on the big boys.

Some companies like Grand Design are enjoying phenomenal growth by building RVs right in the first place, thoroughly inspecting them before they’re shipped to dealers and pricing the RVs to make the affordable to consumers, but still have money left to cover warranty work.

The company started from nothing three years ago and is now the fastest growing manufacturer in the industry. I got an email today from one of their consumers lauding Grand Design’s quality and customer service.

So, it is possible for RV builders to make quality RVs!  If one company can do it, why can’t the rest?

For more fun, listen to this Michigan Lemon Law lawyer explain why people shouldn’t buy RVs by clicking here.

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About Greg Gerber

Greg Gerber is a freelance writer and podcaster who has been writing about the RV industry since 2000. He is the former editor of RV Daily Report and can be reached at greg@rvdailyreport.com.

123 comments

  1. Jackie southerland

    I will never be sorry we traded in our open road 5th wheel for an Avion made of aluminum and real wood.

    • Tim and Melanie Mornard

      Jackie Southerland – we just bought an Avion too! I don’t know much about them but am impressed with the quality and sturdiness…

  2. Grand Design is no longer independent. It was sold to Winnebago. Granted, not company A or B but C++.

  3. We put our toes into the RV world last year by buying a 1996 Itasca class A to try it before spending a lot on a newer unit. After looking for a year and surfing the forums I would not feel any more confident that a newer class A would be better than our current one. My brother has been through three travel trailers in a year before he got a “good one”. The first one spent more time in the shop and was just not “fixable” as the design for the fridge was poor and it would not cool down. I find it so hard to believe that some many people are spending about $80-$100k for class A’s that are so poorly made and nothing is changing. With all the info on the web you would think these would be sitting used for a very long time. Or is it our disposable lifestyle?

  4. It’s the nature of the beast with RV’s. You have to recaulk annually and the bigger the unit and drivetrain the more there is to keep up with. We just purchased a used 2016 Lance 1062 Truck Camper. One of the jacks doesn’t work right, the skylight leaks when it rains and the 2nd time hooking up the water supply (with a pressure regulator) a hose fitting broker spilling out water everywhere. On the other hand my sister in law purchased a new manufactured home, the vinyl floor was wrinkled, the roof leaked, doors were’nt hund right, moldings didn’t match up etc. So in general anything you buy today is all about fast construction and a quick sell and make a profit. Worry about problems (maybe not) later.

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