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California RV manufacturers and dealerships hope a five-page provision in the hefty 1,071-page stimulus bill, expected to be signed by President Barack Obama today (Feb. 17), could help turn around their beleaguered industry.
The Press Enterprise, Riverside, reported that RV buyers would be able to deduct the sales or excise taxes paid for a motorhome, according to the stimulus provision. It doesn’t apply to travel trailers or towable RVs and is restricted to the taxes for up to $49,500 of the purchase price. Customers with an individual income greater than $125,000 or $250,000 jointly wouldn’t be eligible for the deduction.
“It’s still a significant tax incentive,” said Amy Coleman, spokeswoman for Riverside-based RV manufacturer Fleetwood Enterprises Inc.
A typical RV owner is a married 49-year-old with an annual household income of $68,000, according to the RV Industry Association (RVIA). Motorhomes can cost $41,000 to $400,000 new, according to the group.
Fleetwood has no illusions that the stimulus bill, once signed into law, would cause the RV industry to right itself immediately. Lenders would still need to be more willing to give loans to customers wanting to buy RVs and to dealerships wanting to carry the newest inventory in their showrooms.
The Federal Reserve recently added RV loans (to consumers as well as dealerships) to its Term Asset-Backed Securities Loan Facility (TALF) that would assure the lender its loan was backed by the federal government.
Just being included in the stimulus bill – prior versions only included motor vehicles and light trucks — is a morale boost to RV businesses, she said.
“Our industry as a whole is making progress,” she said.
Brad Williams, chief executive officer of MVP RV Inc. in Moreno Valley, was surprised the bill is limited to just motorhomes and not towable trailers which his company manufactures. He hopes the stimulus will also help trailer sales if customers begin to feel more confident in the economy.
Dealerships have struggled to sell off inventory as banks have tightened lending standards and numerous RV manufacturers have cut back or closed.
“Anything would be helpful right now,” said Scott Richardson, president of Richardson’s RV Center Inc. in Riverside.
A large percentage of his motorhome customers though would be over the stimulus bill’s $125,000 individual and $250,000 household income threshold. “Those are our buyers,” he said.
Richardson said customer traffic to his stores has increased recently as it typically does leading into spring and summer, but even customers with good credit are being denied loans under stricter lending standards as banks hold tight to what they have.
“We can give all the tax credits we want, but the banks still have to lend the money,” he said. “We’ve just got to give the consumer confidence.”