Price discounting in the aftermath of the Sept. 11 terrorist attacks led to Class A motorhome manufacturer Rexhall Industries Inc. reporting a third quarter loss.

The Lancaster, Calif.-based firm lost $655,000 during the three months ended Sept. 30, despite a 12% increase in sales revenue to $13.9 million.

During the third quarter of 2000, Rexhall earned $498,000 on sales of $12.5 million.

The loss for the July-through-September period was Rexhall’s first quarterly loss since 1997.

After the first nine months of this year, Rexhall was in the red a total of $404,000 despite a 5% increase in sales to $50.3 million.

“With our industry in a down market for the last year and a half, the events of Sept. 11 certainly exacerbated a difficult situation,” said Bill Rex, CEO. “Dealers simply stopped taking product, which caused us to start discounting current model year product for the first time in this long down market.”

The price discounting forced Rexhall to write-down the value of its dealer and factory inventory by $528,000.

Rexhall’s shipments during September were one-third of the company’s average during the first eight months of this year, he added.

“However, we did ship 94 units in October, but it took some steep incentives,” Rex said.

Rexhall had 100 unsold, finished motorhomes as of Sept. 11, but that number has been reduced to 10 units, which is the low for the year, he said.

The company laid-off 185 production workers in late September but 40% of them were recalled to their jobs two weeks ago “and we expect to be back to pre-Sept. 11 production levels the week after Thanksgiving,” said Mike Bourne, COO.

Two of Rexhall’s largest dealers went out of business during the third quarter, which added $250,000 to the company’s bad debt expense. However, those two dealers were replaced and Rexhall plans to sign-up more dealers during the industry’s National Trade Show in Louisville Nov. 27-29.