Editor’s Note: The following is a “Guest View” column for RVBusiness Magazine authored by high-profile Minnesota dealer Dan Pearson addressing the long-standing controversy between retailers and builders over the timing of new model year introductions. Pearson is the second generation owner of PleasureLand RV Centers, based in St. Cloud, Minn. Founded in 1971, PleasureLand RV Centers operate six stores located in Ramsey, Brainerd, Willmar, Long Prairie and St. Cloud along with PleasureLand Truck Center. Pearson has served more than 20 years on various Recreation Vehicle Dealers Association (RVDA) committees and as a board member and chairman for the Fairfax, Va.-based trade association. An RVDA activist, Pearson currently serves as vice-chairman of the Mike Molino RV Learning Center.
The introduction of 2016 models at the recent Louisville show simply reaffirms the dealers call (49%) in the third-quarter Baird Equity Research RV dealer survey, for a consistent mid-summer new-model introduction. Are we now headed for a third forced liquation of product a year?
The devaluation of the dealer inventory by the early introduction of the next model year is without question harmful to a dealer’s bottom line.
In the annual race by the manufacturers to see who can change from a “green to a blue exterior decal” and call it the next model year seems to now fall in the March to April time frame. Show season is in full swing and the hot spring selling season is starting to launch and where do we find ourselves? Holding back orders and trying to liquidate inventory as the new models are going to be rolling out and no one wants to bring in outdated, devalued inventory. Heck, the snow isn’t even off the ground in the northern tier of the country. Seems strange to take the momentum out of the hottest selling time of the year doesn’t it?
In the middle of the great summer selling season of late July and August, we find ourselves in liquidation mode once again. The new models that were introduced just three or four months ago must go as we get ready for the next batch of all-new models that will be introduced at Open House in September. Once again it doesn’t seem to make sense to be cutting margin on the new models just introduced a few months ago.
If we continue to find the third generation of the latest and greatest at the Louisville Show in a nine-month period, dealers will be forced into a third liquidation of the year. Dealers will need to get rid of the products they just purchased 60 days ago at Open House. Seems like a really strange way to do business and manage inventories.
Manufacturers are not unscathed with this dilemma. Discounting to the dealer is forced for any products unsold in the yard at the time of model change in the spring. Dealers are reluctant to bring in devalued inventory without a substantial incentive. Yet, again, manufacturers are faced with discounting current year product in late summer as they try to force feed dealers to take the “old” new product prior to Open House where deals and interest reimbursement run rampant. It seems strange to do this to yourself twice and maybe three times a year doesn’t it?
Maybe this is the reason the new model introduction discussions are being discussed by more and more thoughtful dealers and manufacturers.
Manufacturers have taken notice of the costs of coming out with two or three versions of a given product each year, much less the discounting of devalued inventory.
The solutions to this or any other issue aren’t always easy. But, the desire to fix a problem is where leaders grab ahold and strive to find an answer.
Afterall, the model year debate has been going on for years.
In a letter that Wade Thompson, the late chairman and president of Thor Industries Inc., wrote to then-RVIA President Dave Humphreys in 1992 regarding the new model introduction, Wade wrote “Having two introduction dates for our industry… seems to be an unnecessary duplication and is confusing to dealers.” In looking for a solution, Wade said in reference to the RVIA seal, that “RVIA could police it by dating and not sending out seals until that specific date.”
So, here we are 22 years later with the same thorn in our foot and wondering why it still hurts.
As we look for a solution, let’s make sure we understand that no manufacturer should be restrained from introducing something brand new and innovative to the industry by a model introduction date. A consistent industry model introduction date should be for the same product/series that have been built previously, but are now getting a “blue exterior decal instead of green one.”
With the new CFPB and the more active FTC overseeing dealer issues — and the pro-consumer environment of the agencies — how long can RV manufacturers expect to get away operating this way before an upset consumer complains to the FTC or CFPB that skipping a model year without any substantive changes to the vehicle is an unfair and deceptive trade practice by the RV industry. It would be better for the industry to solve the dilemma, rather than have federal regulators come in and force feed us a government-inspired solution.
Dealers need to make their opinions known on this issue, pro or con, to the senior corporate leaders of your manufacturers. The devaluation of your inventory will only change if your voices are heard. The discussions are happening, so consider being a part of it.
Manufacturers, you hold the keys to unlocking this industry dilemma. Dealers can only voice their opinions, but are bound by dealer agreements and stocking requirements, so they are unable to vote with their checkbooks. The incentive is not much different for dealers or manufacturers to put our best foot forward with a single new model introduction.
The winds of change are out there and being discussed by industry stakeholders.
Make your voice heard.