Monaco Coach Corp. executives believe the number of RV units sold industrywide in 2005 will be about equal to the number sold during 2004.
They also feel the Coburg, Ore.-based company will continue gaining market share in gas engine Class A motorhomes and towable RVs, and regain some of the market share it recently lost in rear-diesel Class A’s.
During a conference call with investment analysts first webcast on Wednesday (Oct. 27), Monaco Chairman and CEO Kay Toolson said he did not agree with the forecast by University of Michigan’s Professor Richard Curtin of a 9% decline in sales next year.
Toolson reasoned that the RV wholesale and retail markets had been soft since August, so 2004 sales volume would not be as robust as Curtin forecast for the RVIA. Curtin’s most recent forecast calls for a 13% increase in the sale of all types of RVs this year.
One reason for the softness was the impact of four hurricanes that affected Florida and other parts of the Southeast, causing the RV market in that region “to disappear,” Monaco President John Nepute said. “In the last couple of weeks, retail activity has returned to a more normal level (in the Southeast), but we have not seen a post-hurricane surge in demand down there.”
To better align production with softer retail sales, Monaco officials said, they trimmed the company’s 6,000-employee work force and planned to shut down some manufacturing operations in Elkhart, Ind., a few more days than usual in the fourth quarter.
Monaco executives conceded during the conference call that the company’s diesel-pusher market share eroded significantly during the 2004 model year because it did not offer full-body paint on its entry-level diesel models, those priced from $140,000 to $180,000 retail. Consequently, Monaco had to offer discounts to help its dealers sell its lower-end diesels, Nepute said.
The discounts were successful in lowering dealer inventories to “very comfortable” levels, and Nepute added, “We ramped up our paint capacity, which enables us to paint almost every motorized product we have.
“With the order picture softening, it may seem like small consolation, but we’ve actually been very encouraged by the positive response from retail customers to our new, 2005 models at the retail shows and rallies this summer and fall,” Nepute continued. “We spent a considerable amount of time making our low and mid-level priced diesel products more competitive and it seems to be paying off.”
Monaco’s share of the diesel-engine Class A market now is around 25%, the same level it was two years ago, said Marty Daley, vice president and CFO. However, Monaco’s diesel market reached as high as a 34% share within the last two years, he added.
Monaco has a 9% share of the gas Class A market, Nepute said.
In 2004, Monaco anticipates its sales revenue will amount to $1.37 billion to $1.38 billion. For 2005, the company is forecasting sales of $1.33 billion to $1.43 billion, Daley said.
“Compared with ‘04, we’re expecting (Monaco) sales to be down by 3% or up by 4%,” Daley said. “We expect to be selling into a flat market overall, but, in general terms, we’ll be gaining market share.”