Many articles were written the last few weeks featuring quotes from RV owners complaining about high gas prices, which now average more than $2 a gallon nationally for the first time ever.
But the head of recreation finance at Cleveland-based bank and financial services firm National City Corp. does not believe high gas prices will hurt RV sales.
Alan Zang, senior vice president at National City, also does not believe the high gas prices are permanent.
“We’re still very bullish (on the RV industry) for the balance of ‘04 and even into ‘05,” Zang said. “High interest rates and higher gas prices are a function of the economy getting more robust. The economy strengthening means people are continuing to be employed and make good money. The impact of higher interest rates and higher gas costs are not enough to overwhelm the fact the economy is, indeed, doing better and will continue to do better over the next few years.”
High fuel costs will, of course, increase the cost of other modes of transportation, Zang said. So, when evaluating the impact of high fuel costs on RV sales, he said, people in the industry need to consider “what attracted people to buy an RV in the first place. It wasn’t because gas prices were at a certain level. It was because they wanted an enjoyable time with family traveling within the U.S. rather than getting on a plane and going somewhere else. All those reasons still exist even with higher gas prices.
“And the advantage of an RV,” Zang continued, “is you can handle higher gas prices by taking a shorter trip.”
Zang cited the example of taking a 300-mile trip in an RV that gets 10 miles per gallon. When gas costs $1.50 a gallon, the 300 miles of travel burns $45 worth of fuel. At $2.50 a gallon, it costs $75 for fuel, a difference of only $30. “That ($30) is the cost of taking a family of four to McDonald’s for lunch,” Zang said. “That’s not enough to make you want to say, ‘I don’t want to do it.’ ”
Gas and diesel fuel prices are at their current levels now, some analysts say, in part because of the impact of a strengthening U.S. economy, the rapid growth in China and low fuel inventory levels coupled with concern over supply disruption because of terrorist activity. The current level of pricing could encourage the oil producing nations to increase production as well as capacity.
“Permanent is not a word that applies well to free markets,” he said. “If prices stay at an attractive level long enough, other sources will enter the market and that, ultimately, will drive the price down, no matter what the commodity.”