An “RV News & Notes” Special Report
Uncertainty within the RV industry has left consumers wondering how they will be affected. Following is an update, and some potential answers.
By Doug Uhlenbrock, Associate Editor
May 2009
The information included in this article was accurate as of April 6, 2009. Because many of the issues covered were unresolved at press time, please note that this information may change or become outdated by the time the magazine is distributed.
The financial crisis that has devastated the economy during the past year has had a profound effect on nearly all business sectors, but perhaps none more than the RV industry.
Beginning with the fuel price surge in the spring of 2008 that pushed the cost of gasoline and diesel to historic highs, the situation for the RV industry has progressively worsened. When the bottom dropped out of the financial market this past fall, businesses and consumers saw a good portion of their investment assets disappear. When the banking crisis followed, financing for potential motorhome buyers and loans for companies to continue operating became harder to secure. The combination of decreased sales, hard-to-find operating credit, and banks refusing to extend existing loans put many well-known RV companies in tenuous situations.
Longtime manufacturers such as Alfa Leisure, Bigfoot Industries, Blue Bird Coachworks, National RV, Travel Supreme, and Western RV shut down operations within the past 18 months. Other big-name builders “” Country Coach Inc., Fleetwood Enterprises, Monaco Coach Corporation, and Rexhall Industries “” filed for Chapter 11 bankruptcy protection this year. Several companies have survived through acquisition. Forest River acquired Coachmen RV; Amadas Coach bought Featherlite Coaches; and Triple E Recreational Vehicles purchased Leisure Travel Vans.
Therefore, owners of orphan coaches and motorhomes built by struggling manufacturers are left wondering where to turn for information and answers. The outlook may not be as bad as it seems.
Orphan owners
If the manufacturer of your motorhome is out of business, do not expect warranty or recall work to be covered. But do realize that many of the motorhome’s components “” including the chassis if made by an independent supplier “” have warranties of their own that may cover repairs. The motorhome’s owners manual should include information about everything in the coach, so review this paperwork to determine what is covered through stand-alone warranties.
If you are notified that your motorhome has been recalled, have the repair made. A safety issue should not be ignored. Determining who will pay for the repair, however, may take a little investigation. Sometimes a vehicle recall issued by a manufacturer is done in cooperation with the company that manufactured the faulty part or appliance. So while the motorhome manufacturer will issue the recall, the supplier of the faulty component may cover the cost of the repair.
Having your motorhome serviced or finding parts should not be a major issue. Service technicians will continue to perform maintenance and repairs on orphan motorhomes. And quite often, the chassis and components found on your coach are still being used by other motorhome manufacturers.
The house structure is one area where you may have trouble finding assistance. The walls, roof, subflooring, plumbing, and electrical wiring were completed by the manufacturer. Make sure to keep “” or acquire if possible “” all schematics related to the construction of your motorhome. This information may prove invaluable should you encounter structure-related issues.
Staying alive
While no company wants the word bankruptcy attached to its name, it does not necessarily signal the end. A company can use Chapter 11 bankruptcy as a “time-out” to give it an opportunity to reorganize, develop a new plan, and find a buyer or financing “” under the watchful eye of the bankruptcy court “” without the pressure of creditors demanding payments. This is considerably different from Chapter 7 bankruptcy, which essentially orders the company to liquidate assets to pay off creditors.
As of press time, Fleetwood, for instance, used Chapter 11 to close its towables division and focus its resources on its motorhome and manufactured housing businesses, which are still operating, while looking for a buyer. Country Coach, which was forced into Chapter 11 bankruptcy, came to terms with Wells Fargo Bank, its primary secured creditor, for additional financing so it could resume limited production with factory-direct sales. Rexhall, similarly, is using Chapter 11 bankruptcy to restructure its debt while continuing to build and sell motorhomes at its factory dealership. And Monaco Coach Corporation announced that Navistar Inc., parent company of Workhorse Custom Chassis and International Truck and Engine, signed a nonbinding letter of intent to purchase certain assets and assume certain liabilities associated with Monaco’s RV manufacturing operation; the two companies anticipated signing a definitive asset purchase agreement by mid-April.
For owners and potential buyers of new motorhomes manufactured by these companies, this is certainly welcome news. But realize, while these reports may provide some optimism, the companies still have many issues to resolve before they can return to normal operations.
Be an informed buyer
Odd as it may sound, there may never be a better time to purchase a motorhome than the present. Both manufacturers and dealers are interested in reducing inventory, so bargains can be found nearly everywhere. This includes motorhomes built by quality manufacturers that have weathered the economic storm thus far. But before you race out to the nearest dealership to buy that new coach you’ve had your eyes on, understand that there are questions to ask before signing on the dotted line.
Find out about the motorhome manufacturer’s warranty. Most new motorhomes come with a 12-month limited factory warranty (some are even longer) that covers problems that may occur during the first year of use. Also, remember that separate warranties are provided for other components in the motorhome. As most owners will attest, it is usually during the first year of a new motorhome’s life that the majority of problems will surface as the coach and its systems are put through their paces in real-life situations. That’s why it’s important to make sure the motorhome is covered and these issues remedied without additional cost to you.
As mentioned earlier, don’t expect a motorhome built by a manufacturer that no longer exists to include a factory warranty. But what about companies that have filed for bankruptcy protection? According to Tina Richey, marketing director at Lazydays in Seffner, Florida, as of March 31, Fleetwood continues to pay warranty repair costs on its motorized RVs (not towables). But warranty work was not being covered by Monaco and Country Coach. She said that Lazydays, in the interest of customer satisfaction, will not charge customers for certain warranty work done on new Monaco and Country Coach motorhomes purchased from the dealer for the first 90 days after sale. She also said that Lazydays will reduce the labor rate it charges by 30 percent for remaining structural repairs that would have been covered by Fleetwood, Monaco, or Country Coach during the balance of the warranty period in the event the manufacturer is no longer able to honor its warranty.
Mike Snell, vice president of sales and marketing for Monaco Coach Corporation, said his company is unable to provide warranty coverage at this time due to the financial restrictions placed upon it by the bankruptcy court. “That being said, if Navistar does end up acquiring the company, I believe they would offer goodwill to the loyal customers who have purchased Monaco coaches,” he noted.
Matt Howard, vice president of marketing and sales administration at Country Coach, also noted that his company has its hands tied in bankruptcy court. “Any expenditures on pre-Chapter 11 items, including warranty claims and recalls issues, are entirely regulated by the court,” he said. “While we do not have permission to release funds relating to these prior expenses, we will do our utmost to assist pre-filing customers with the information they need to enjoy their motor coaches.” He went on to say that all new Country Coach motorhomes purchased factory-direct after March 30, 2009, will include a two-year manufacturer’s warranty.
Bill Rex, president and CEO of Rexhall Industries, said it’s “business as usual” at his Lancaster, California, operation where motorhomes are manufactured and sold factory-direct. He went on to say that the company is honoring all new and existing warranties and that customers should not be affected.
Although some might question the wisdom of buying an orphan motorhome or a coach from a company in financial distress, under the right circumstances it quite possibly could be the smartest deal you’ve ever made. Talk with the dealer about price, but also ask whether some type of manufacturer warranty replacement option is available that will cover items typically included in the factory warranty.
Mr. Snell said that many folks who have purchased a new Monaco coach recently have signed up for the Monaco Extended Care Plan for just this reason. The plan is administered through Prizm, a third-party service provider, so it is not affected by the company’s bankruptcy filing. According to Mr. Snell, the plan provides limited coverage for items that would normally be included in the manufacturer’s warranty, providing a bridge of protection between the time that the motorhome is purchased and the point at which the extended service plan takes effect. For more information, contact Monaco at (877) 466-6226, option 5.
Another option is the Choice Protection Plan that’s being offered through Beaver Coach Sales of Oregon and the Bend Service Center. According to Ole Olsen, finance manager for Beaver Coach Sales, this plan is available to anyone who has purchased a new motorhome regardless of the type of coach or dealer through which it was bought. The plan provides 12-month/12,000-mile coverage for coaches whose manufacturer no longer honors the warranty, and the work can be performed at any authorized service center. “With the climate in the industry, we thought that the Choice Protection Plan provided us an opportunity to help RVers protect their investment during the first year, which is typically when you see the most repair issues,” he said. The plan is only available in conjunction with the purchase of an extended service agreement and costs an additional $350. For more information, contact Mr. Olsen at (800) 382-2597.
There likely are other plans available to help bridge the coverage gap between the initial sale and when an extended service agreement would take over, so check with your dealer.
If you do decide to purchase a new coach, make sure you are satisfied with its condition before you leave the lot. If something isn’t right, have it fixed “” or have it put in writing that it will be repaired “” before you buy. It also may be a good idea to check into a campground close to the dealer immediately after the purchase to test everything. That way, if you do find problems that weren’t apparent before you left the lot, you can return to the dealer to have these issues fixed right away.
The economic crisis has changed the landscape of the RV industry, and there’s no way to predict how long the struggles will continue or what other companies may be affected. But the industry has faced tough times before, and it stormed back with more innovative ideas and stronger companies. And although new RV sales may be down, reports suggest that campgrounds and RV parks are as busy as ever, indicating that the RV lifestyle remains a popular form of recreation for millions of people. So with history on its side and a solid base of dedicated enthusiasts continuing to enjoy this form of travel, there’s reason to be optimistic about the future of the RV industry.