The North American RV arena may be shedding its image as a cyclical industry for a variety of reasons, not the least of which is the gradual arrival of the Millennials as avid outdoor enthusiasts and bonafide RV buyers, Thor Industries Inc. President and CEO Bob Martin said Monday (March 12) in an address to the Elkhart Rotary Club.
“I’ve been asked a lot, being located in the ‘RV Capitol of the World,’ about how we’re doing here in Elkhart?,” said Martin in his presentation at the Matterhorn Conference Center. “About four years ago, when I started this job, we were known as a cyclical industry. People thought the cycle was coming and didn’t care what facts we threw at them, they know that it’s coming. Well, it’s nine years into the cycle – it’s typically six or seven years – and at nine years we’re still building factories. Our backlogs are very strong, and we see great optimism in our dealers’ eyes when we talk to them at retail shows.
“As an industry, last year we ended up with just over 500,000 units total, and that was far ahead of 2006, which was just about 400,000 units total,” Martin told the Rotarians. “So, we have blown away the prerecession peaks. And many people are looking at the industry as really rocked by youth. That’s going to be our growth generator as we take it to the next stage and it’ll really be the cycle-buster.”
Martin reviewed other “macro items” that point to an extended RV industry growth curve, including relatively high consumer confidence, low unemployment, fortuitous wage trends and manageable interest rates, even, he added, if they do edge up during the year. Nor are fuel prices viewed as much of a problem at this point.
“Overall, it’s a favorable macro environment that we’re looking at,” said Martin, whose publicly held, Elkhart, Ind.-based firm – the world’s largest RV builder — accounted for more than $7.2 billion in sales and over 230,000 units during its last fiscal year ended in July.
And the consistent influx of a younger generation absorbing space in a market still occupied by the Boomers is the most promising factor of all, said Martin, who told the Rotarians that Thor’s subsidiaries, including Keystone RV Co., Heartland Recreational Vehicles LLC, Airstream Inc., KZ Inc., Thor Motor Coach and Jayco Inc. (as well as supplier Postle Aluminum Co.), currently employ 19,000 people in 197 facilities, 85% of them in northern Indiana, while retailing products through some 2,000 independent dealerships.
“One of the biggest things for us is demographics,” reiterated Martin. “It’s simply a younger demographic, people of Generation X and Y. We’re talking about Millennials, but we’re on the front edge of it; a front-edge Millennial is 35. We’re seeing some of those customers buying, but the big thing is we’ve got about four more years of Boomers coming into our buying demographic – that’s key – and in that four or five years the Millennials will be hitting about age 40.
“The Millennials are larger than the Boomers,” he added. “So, for us, we see that as our biggest opportunity. Through the RV industry’s Go RVing marketing campaign, through Thor Industries and insider advertising campaigns, we’re literally trying to speak to this younger demographic to educate them on what an RV is. We’re doing that at different shows; not just the typical RV show, but also lifestyle shows.”
Ohio-based Airstream, said Martin, an Elkhart native and former Purdue University football lineman, is one of the best examples of a company breaking the mold of what an RV is and who they’re reaching with average buyer ages having dropped recently from 60 to just under 50.
“Airstream does make RVing cooler,” he observed. “To the point – and this is a great sign for the industry because Airstream is a $100,000 travel trailer – we just announced a $40 million, 700,000-square-foot expansion in Ohio. It’s an overall positive for the industry because if we saw any dip coming, we probably wouldn’t have made that large investment. It’s a $100,000 trailer, so Airstream is the ultimate discretionary item. For us, that’s a great sign that there’s such demand there.”
Efforts to reach a more diverse audience in the future – a major focus of the industry’s Go RVing campaign in which the national Recreation Vehicle Industry Association (RVIA) and the Recreation Vehicle Dealers Association (RVDA) are co-owners — will also play a role in the industry’s future growth strategy, noted Martin.