RV Sales Boom Is Fueled By Millennials As They Overturn Stereotypes And Enjoy The Itinerant Life
, – Forbes.com
Discard the stereotypical image of RV owners like “Cousin Eddie,” the back-woods, beer-swilling flatulence machine portrayed by Randy Quaid in the movie Christmas Vacation.
Here’s the new reality: Experience-craving millennials, joined by retiring baby boomers, are helping fuel an unprecedented boom in sales of recreational vehicles, giving a cool sheen to the itinerant life, and getting the industry to believe that it can move past the wild volume cycles that almost put it out of business during the Great Recession.
RV sales have climbed by more than 15 percent in the U.S. each of the last two years, and 2017 is expected to be the year they finally broke the 500,000 mark for the first time. Share prices of the two leading publicly traded RV manufacturers, Thor Industries, the No. 1 overall maker, and Winnebago Industries, No. 3 overall, have been hitting new record highs; the No. 2 maker in the industry, Forest River, is a subsidiary of Berkshire Hathaway.
And RV makers have recently opened or are about to bring online at least 15 significant new facilities or expansions in northern Indiana, where the industry is headquartered, as well as in Iowa, Idaho, California and Oregon.
“Our growth is absolutely coming from young families and millennials getting into the lifestyle,” Frank Hugelmeyer, president of the Recreational Vehicle Industry Association, headquartered in Reston, Va., told me.
Mike Wendland, who criss-crosses the country in a Mercedes-Benz RV and shares his experiences on RVLifestyleChannel.com, agreed that the RV industry “sees great potential to hook millennials quickly, when they’re young, and as they age and as their incomes grow, to upsell them. That’s probably a pretty good strategy.”
And there are good reasons for that. First,Hugelmeyer said, “There is this false narrative that millennials don’t have any money; that’s just not true.”
Second, Hugelmeyer said, there’s a huge variety of RVs in types and price ranges, and millennials can start cheap. “Smaller trailers and towables are actually the exploding market,” he said. “You don’t even need a [big] vehicle to pull an RV behind you, particularly if you have a young family or you’ve downsized. A Mini can even pull some RVs.”
For just $7,000 to $10,000, entry-level RVs can give users “a bed, a small kitchen, a small toilet” onboard. “Then as you start to move up the ladder in size you’re getting standing showers and TVs, and soalr panels. You have a good-better-best that’s laid out in product categories in a wide variety of different formats.”
Third, he said, millennials are among the chief promoters of the idea that enjoying life in this day and age is all about experiences rather than things, “and we deliver [experiences] as well as any sector in leisure activities in the entire country. We’re connected to what is a fundamental American zeitgeist: the adventurous outdoor life.”
Depending on the particulars, Hugelmeyer pointed out, RVs lend themselves not only to hitting the open road but also to camping, tailgating and attending events ranging from concerts to festivals to sports tilts, from NASCAR to Burning Man.
“The RV lifestyle delivers high-quality experiences to any age, any demographic … and does it in style and comfort and convenience and connectivity all in one package. Why not become the vehicle of choice to the greatest mobile generation in America?”‘
A technology correspondent for NBC, Wendland noted that a recent wrinkle known as “boondocking” is especially appealing to millennials — where RV owners “go off the grid” and trek to national or state forests, away from the traditional and often crowded RV campgrounds. Energy-yech advances including solar roof panels and lithium-ion batteries, and of course ubiquitous internet connectivity, make it easier for today’s RV owners to distance themselves from the throngs.
“We find that millennials who own RVs aren’t so much destination-bound as they are activity-bound,” Wendland said. “The vehicle just takes them to places they can kayak or mountain-bike.”
But Wendland said that it’s still “the immense numbers of retiring baby boomers” who are most important to the industry’s further expansion. “There are 10,000 people a day reaching retirement age,” said the social-media personality who, along with his wife, Jennifer Wendland, have hundreds of thousands of online followers. “Many are affluent and active health-wise, so that’s where I see most of the growth.”
Indeed, a number of fundamentals that favor Americans of most demographics also have been going the way of the RV industry. The economy is picking up strength and output, with strong consumer confidence and at least some income growth. “Most Americans feel wealthier,” Hugelmeyer said.
Specific to the industry are other benign factors including stable interest rates, broad credit availability — and, of course, reasonable gasoline prices, which are crucial for enjoying and affording vehicles that may cover only a handful of miles to the gallon. Yet the modern RV also is much more fuel-efficient than just a few years ago.
The Republican tax law also is kind to RVs, for instance in maintaining the mortgage deduction for second homes — for which many RVs qualify.
Another, under-appreciated tailwind is the fact that auto sales have relatively rapidly flipped to about 60 percent-40 percent SUVs and pickup trucks over sedans, from the reverse shares just a few years ago. And these larger models are the classic capable “tow” vehicles that make it easier for consumers to consider pulling bulky RVs behind them.
Over the half-century of its existence as a major industry, RVs got used to severe cyclical sales swings that often amplified what was happening to automotive sales. But now, propelled by the interest of a millennial generation that is still coming into its financial flowering, the industry sees its current success “as a sustaining trend,” Hugelmeyer said.
And there’s one more positive thing on the horizon for RVs: automated vehicles. After all,what is the ultimate objective for automakers and Silicon Valley for individual and family transportation in driverless cars other than to produce what amount to rolling lounges? They might want to partner with an industry that knows how to do the lounge part pretty well.