News late last week that the nation’s largest recreational vehicle manufacturer, Thor Industries Inc., was loaning $10 million as working capital to the country’s biggest RV retailer, FreedomRoads LLC, actually represents little change in the ongoing relationship between the two industry leaders, reports Thor COO Richard “Dicky” Riegel III.
Even though FreedomRoads President Marcus Lemonis last week confirmed that Thor would become a “preferred vendor” for the 77-store retail chain as a result of the new agreement, Riegel emphasized in a weekend interview that Thor already was FreedomRoads’ largest vendor and that the industry at large – and Thor’s existing dealers in particular – shouldn’t jump to conclusions and view this as a significant departure from the status quo of an independent company doing business with another independent firm.
“FreedomRoads already is a strategic partner of Thor’s, based on the volume of business that their dealerships do with all of our companies,” said Riegel. “So, when they had a short-term need to help with the working capital, it made sense for us to help out. They are seeking alignment with strong partners in the industry, and Thor’s balance sheet and the scope of our business and our product lineup obviously make it appealing for them to align with Thor.
“They want to do more business with strong companies,” he added, “and they’re doing that not just with the manufacturers, but with their service providers and other partners in the FreedomRoads and Camping World lineup. So, it’s kind of a natural. They’ve been stung by companies that have gone out of business and are otherwise weak and maybe aren’t paying warranty bills and the like. And that’s just not a situation that Thor is ever going to be in.
“So, there isn’t a lot of behind-the-scenes story to it. There is no exclusive agreement. They just want to do business with fewer partners and stronger partners. And we’re going to be that.”
Lemonis confirmed late last week that his company – also known as Camping World/FreedomRoads – had entered into an agreement through which Jackson Center, Ohio-based Thor would become a “preferred provider” to FreedomRoads’ national chain of RV dealerships. As part of the agreement, according to SEC filings, Thor initiated a $10 million loan to Steve Adams, majority owner of FreedomRoads Holding Co., who in turn contributed the money to FreedomRoads. The five-year loan bears an interest rate of 12% per annum.
According to the chief executives of both companies, the news is a reflection of a rapidly changing environment in the RV industry.
“Going forward, there will be a limited number of manufacturers that we do business with,” Lemonis told RVBusiness. “With what’s happening in the industry (with regard to the economy), we need to align ourselves with companies that will be there in the long term. This partnership will allow Thor to continue to secure shelf space with us and grow market share while we can continue to have a strong balance sheet and also grow our market share.”
Lemonis said that Thor’s varied divisions, including Airstream Inc., Keystone RV Co. Inc., Dutchmen Manufacturing Inc., Four Winds International Corp., CrossRoads RV, Komfort Corp., Damon Motor Coach and Breckenridge, already represented about 50% of FreedomRoads’ towable business. And despite the preferred provider status, he noted, there clearly are FreedomRoads stores that would not be able to handle Thor product because of existing territorial issues. “An important point is that this partnership does not mandate Thor to sell product to us,” Lemonis said.
Riegel, again, said he is working to reassure Thor retailers that this new arrangement with FreedomRoads “won’t affect the relationships we have” with the company’s existing dealer body.
“I think some people choose to read a little bit more into it and, you know, want to make something more of it, and it’s just not the case,” said Riegel. “And that will be proven out over the coming months and years when they see that Thor is continuing to work as partners with all its dealers. So, I’m not worried about that because Thor tends to demonstrate what it’s really doing through its actions. And we’re going to continue to work with all of our existing dealers and also with the FreedomRoads dealers as we seek in these tough times good ways to partner with all of our dealers and suppliers. We want to make sure that the strong companies get stronger through this process.”
By the same token, Riegel expects this new alliance to have an equally positive effect on his dealers’ prospects with national lenders. “Actually, it could positively affect finance companies,” he maintained. “They need to shore up their business and make sure that they’re not financing products in shaky relationships where, ultimately, that product comes back to them. You know, that’s what has many of the finance partners in a bit of a funk right now. They want to do business with the strong companies and dealers, so I think that’s yet another positive factor in all of this.”