By Andrea Holecek, Times of Northwest Indiana
andrea.holecek@nwi.com
The inability for both RV retailers and their customers to find financing is major factor among many responsible for the recent closings of five Indiana mobile home and travel trailer manufacturers.
"The lots are already full of them (recreational vehicles) and they're not selling because people can't get financing unless their credit score is in the 800s," said Loyal "Milo" Milos of Cruise America in Schererville, which rents RVs. His business is booming.
"Sales are way off, but couldn't be any better for rentals," Milos said.
The industry's retailers and manufacturers, hurt by $4 a gallon fuel prices last year, saw 2008 RV shipments fall by 32.9 percent to 237,000 units from a year earlier, according to a study for the Reston, Va.-based Recreation Vehicle Industry Association.
Richard Curtin, director of consumer surveys at the University of Michigan, said that total 2008 RV shipments declined due to the tightest credit conditions in several decades, higher interest rates, falling household wealth, slower growth in real incomes and the crisis in consumer confidence.
Curtin predicts 2009 shipments will drop to 131,000 units.
Al Paschen, who owns CAMPLAND RV in Burns Harbor with his family, said Thursday that sales are slow and he's not replacing the inventory that's sold.
"Last year we had a terrific first quarter before things fell off, but not this year,," he said. "Motor homes sales especially have taken quite a hit. We're down 30 percent from first quarter 2008."
Financing has tightened and really is bad for some RV dealers because national banks have stopped lending for RV purchases, Paschen said. Most of his financing comes from the same community bank in Valparaiso that the dealership has used for 47 years.
"Banks have tightened and tightened standards but the community and regional banks are still making loans," Paschen said. "It takes more work to get financing s and sometimes people have to try several banks.
Paschen and most RV dealers do "floor planning" financing, in which they borrow funds from a lender to pay for their inventory then repay the lender when the vehicle is purchased. The longer an RV remains unsold, the longer they pay interest and the more the vehicle depreciates.
"We have a lot of money sitting out there on the lot, and when they (motor homes) age we need to get rid of them," Paschen said. "We're paying interest on them and it can eat up profit when they're an expense every month and not bringing in income."