Demand for RVs declines in INW
High cost of fuel, rising interest rates expected to continue in ‘24October 12th, 2023
Growing fuel costs and rising interest rates have been slowing consumer demand for recreational vehicles and limiting sales this year, says Tony Strand, co-owner of Airway Heights RV.
“It seems like the number one roadblock to people wanting to purchase was the price of fuel,” Strand says.
RV sales at Airway Heights RV also were impacted by high interest rates, which Strand says many consumers who finance their RV purchases find unappealing, Strand says.
“Customers are concerned about that. They’re saying they’re not willing to spend as much based on their credit profile,” Strand says. “Not until these rates go down.”
National Remarketing LLC does business as Airway Heights RV. Strand co-owns, with his wife Christina Strand, two RV dealerships in Spokane County located at 8221 W. Sunset Highway, on the West Plains, and at 4006 N. Division, in North Spokane.
RV sales at Strand’s dealerships have leveled off from high demand during the pandemic when the industry was boosted by consumers seeking safe outlets to recreate, he says.
Nationwide, RV sales in March were down 54.3% from a year earlier, which is a trend that’s expected to continue for the remainder of the year, according to a report from online automotive news outlet MotorBiscuit. The decline in sales is attributed in part to the resumption of air travel.
Strand concurs and says more of the same market conditions are expected to continue impacting RV sales next year. Airway Heights RV has sold about 200 units from January through the end of September, he adds.
“Until the fuel prices come down and the interest rates come down, I think that it’s going to stay about the same,” says Strand regarding sales activity. “There’s not going to be much of an increase for us next year from this year’s sales.”
Strand declines to disclose the annual revenue at Airway Heights RV, however he says the company has grown 15% to 20% in each of the last three years.
Used RV purchases make up 70% of all sales at Airway Heights RV, with sales of new RVs accounting for the rest, says Strand.
New RV sales have been supported by high demand for short travel trailers that are popular with first-time buyers and younger consumers, he says.
“What seem to sell really well for us are the 14- and 15-foot travel trailers,” says Strand. “A lot of people who buy those tow them with mid-sized SUVs … and these little 14-footers are easily towed by those.”
Smaller RVs also are appealing to these buyers because smaller models are lighter in weight compared to full-size motorhomes, which helps keep fuel costs down.
RV manufacturers who ramped up production at the height of the pandemic to meet consumer demand at the time have now exceeded current demand, which could bring down prices for the rest of this year and into next year, according to MotorBiscuit’s analysis. Continued inflation could negate declining RV prices for consumers, however.
John Ferrando, founder, president, and CEO of Fort Lauderdale, Florida-based Blue Compass RV, which operates four Spokane-area stores, says RV production has caught up with consumer demand.
At Airway Heights RV, Strand says he keeps about 45 RVs combined in stock at his two stores, which keeps overhead costs down, resulting in better prices for buyers.
“Part of keeping the overhead low is keeping the inventory low so we don’t have to carry costs on units that we’re not selling,” Strand explains. “I can always order more from the factory. I can have those here in a week and replenish our stock.”
Another trend in the RV industry involves customers avoiding financing and instead paying cash to purchase an RV to live in, Strand says, adding that recent wildfires in Spokane County contributed to a handful of end-of-season sales at Airway Heights RV.
“During the fires that happened out in Medical Lake, we probably sold half a dozen trailers to people who lost their homes,” says Strand.
Some of the fire-affected consumers were looking to buy larger units suitable for long-term, full-time use, he says.
“We didn’t have every unit that people wanted because we do specialize in a lot of smaller (units),” Strand adds.
Smaller travel trailers are preferred for the fastest growing customer demographic at Airway Heights RV, which is younger adults, Strand notes.
Ferrando, of Blue Compass RV, says the industry’s long-term demographics show younger and more diverse buyers are embracing the outdoor lifestyle.
In addition to new and used recreational vehicle sales, Airway Heights RV also has a parts and service department that sustains business operations in the fall and winter, Strand says.
Service requests likely will exceed sales activity at Airway Heights RV in October and November, however Strand says he expects sales to pick up again in January and February following major RV shows.
He says he’s hopeful sales will remain consistent from spring through the end of the summer next year.
Prior to opening Airway Heights RV in 2020, Strand says he was a wholesaler of RV for over a decade.
“I’ve been in the auto business since the ’90s, and we went on our own 14 years ago wholesaling autos and RVs,” he says. “We just wanted to do things with multiple revenue streams … and the goal is to do things that we like to do.”
Six full-time employees work in sales for the company, plus three full-time service employees, he says.
In addition to two Airway Heights RV dealerships in Spokane County, Strand also co-owns and operates other companies with his wife, including West Coast Screen Printing and Embroidery, which operates two stores in Spokane and Kennewick, Washington; National Remarketing LLC, a used-car dealership in Spokane Valley; Airway Parts & Service, an auto service shop in Spokane Valley; Spokane-based Airway RV Parts & Service, an RV service company; and Gray Valley Investments LLC, a real estate holding company, in Veradale.