Editor’s Note: The following column by Recreation Vehicle Dealers Association (RVDA) Chairman Mike Regan details the latest report from RVDA examining key metrics in the industry.
Many dealers get useful information from their 20 Groups/performance groups about how well their own businesses operate compared to others in the group. Another excellent way to see where you stand is by comparing your dealership numbers with industrywide benchmarks. Each year, the June issue of RV Executive Today publishes figures on national average net profit, gross margin, dealership expense, and more.
The results of this year’s study back up what both retailers and manufacturers have beenv very much aware of — that dealer inventory levels were too high during the winter and spring. RVIA has reported that shipments for the first quarter reached 99,976 units. That’s down 27.1% from 137,086 in 2018.
Retail sales reported by Statistical Surveys Inc. are down only 9.6% for the first quarter. The company reported 87,510 new-unit sales in 2019 for North America. Even though retail registration delays, weather, and other economic issues can affect first-quarter performance, dealers are reporting brisk sales during the spring selling season.
The difference between retail and wholesale shipments shows dealers reducing their inventory by 12,466 units — a great step in the right direction. And the 87,510 retail units represents the third-best first quarter ever. Industry insiders believe that, at the current rate, dealers’ inventory will be rightsized by summer.
As the retail market has become increasingly competitive thanks to Internet shoppers and increased dealer inventory, retailers have reduced gross margin on new units from 12.4% in 2017 to 11.5% in 2018. Meanwhile, expenses are up. Advertising has increased from 5% of grosss margin in 2017 to 6.1% in 2018. Floorplan expense has also risen, from 3.3% of gross margin in 2017 to 5.1% in 2018.
These are all warning signs for RV dealers. Sales income is down while expenses are up. I have a friend who says, “Bad habits are formed during good times.” We’ve had a good 10-year run since the end of the Great Recession in 2009. Now it’s time to look in the mirror and compare our dealership numbers with some industry benchmarks.
In the near future, there will be a new benchmark RECT (repair event cycle time). There’s a lot of effort underway to get this measurement in front of all the industry’s players. Every dealer should be able to see his or her own RECT, as well as an industry standard. My goal is to get this information to every manufacturer, as well. So take some time to compare yourself to your peers.