Thor on Track to Grow with RV Industry as Supply Meets Demand · Thor Industries Inc. (THO) is...

July 25, 2013 Companies: BRK.A, THO, WGO

Thor on Track to Grow with RV Industry as Supply Meets Demand

INITIAL REPORT Susan Jennings Kantari, [email protected]

Summary of Findings Thor Industries Inc. (THO) is following sales growth trends

in the recreational vehicle industry and expected to maintain market share into 2014.

Thirteen of 21 sources reported motorized sales as flat to increased year over year for the past three months, with most specifying a 5% to 20% range. Four reported sales as down, and four had no comment.

For 17 of 21 sources, July motorized sales year over year were flat or up 15% to 25% on average. Four had no comment.

Towable sales for the past quarter were flat or up for 15 of 21 sources, with 15% to 30% average growth. One source saw a sales decrease. Five sources had no comment.

July towable sales year over year were flat to up for 13 of 21 sources, with 10% to 20% average growth. Eight sources had no comment.

Supply for RVs is either meeting demand or coming in slightly short of demand, according to RV dealerships, manufacturers, and industry specialists. They do not believe Thor is ‘stuffing the channel’.

Sources in the manufacturer and supply chain silos report interest from a widening demographic as a driver of continued sales growth. Low interest rates, job growth, and improving consumer confidence in the U.S. economy are also driving continued growth in the industry.

Industry Sales

Growth Thor Sales Growth

RV Dealerships

Manufacturers

Supply Chain N/A N/A

Industry Specialists

Research Question:

Can Thor Industries maintain its sales growth as competition in the RV industry heats up?

Silo Summaries 1) RV DEALERSHIPS Seventeen of 21 sources see motorized sales as stable to increasing with most seeing growth between 10% to 25% year over year and Thor keeping pace with competitors. One source has seen sales decline year over year for the past three months. Three had no comment. Eighteen of 21 sources are seeing towable sales up 5% to as much as 250%, with most lying near the 10% to 25% range with Thor generally keeping trend. Three sources see sales as stable year over year. Two sources said Thor sales were not keeping pace with competitors because of lack of inventory. Inventory, including Thor’s, remains in line or slightly short of demand. Upward sales trends are expected to continue, spurred by more easily available credit, improving consumer confidence and an increased interest in RVs by a wider demographic. Berkshire Hathaway’s Forest River Inc. was cited most often as Thor’s main competitor, but Thor appears to be holding steady and even gaining market share. 2) MANUFACTURERS Our first source sees motorized sales up single digits for July and the past three months year over year. Our second source sees sales up 29% for January through May and our third source sees their sales up from 29% to 45% depending on product. Towable sales increased, but to a lesser extent. Our first source sees sales up in the low double digits for July and for the past three months year over year. Our second source sees sales up 12% for January through April. Our third source sees sales up double digits year over year. Inventory is in line to slightly short of demand for all three sources. One source’s expectations of Open House and 2014 sales are high, while two had no comment. One source expects increasing pressure on margins. Two sources say the attraction of a wider demographic will boost growth. 3) SUPPLY CHAIN Our first source expects 5% to 6% sales growth of aftermarket parts for his southwest region year over year. One source reports supplier inventory is increasingly being sourced from overseas. Thor may stand to improve margins if it utilizes its free-trade zone in Elkhart, Ind., to initiate direct outsourcing of its supply parts. A widening age demographic will help continued sales growth. 4) INDUSTRY SPECIALISTS Wholesale motorized sales have increased 30% for May year to date, according to two sources. Wholesale towable sales are up 11% through May, according to one source. RV retail sales increased 16% for motorized and 9.5% for towables from May 2012 through April 2013, according to another source. One source expects towable sales to make up 89% of all sales in 2014. Inventory is in line with demand. Growth for 2014 is expected to be around 4%, according to two sources.

1

1 Ferry Building, Suite 255, San Francisco, CA 94111 | www.blueshiftideas.com

mailto:[email protected]

http://www.thorindustries.com/corp/

http://en.wikipedia.org/wiki/Channel_stuffing

RV Industry

Background THO beat analysts’ estimates on its third-quarter earnings, boasting a 13% year-to-year sales gain, led by a 48% year-to-year increase in motorized vehicle sales and a 9% boost from towable vehicle sales. Bus sales were the weak point on the call, remaining flat compared to the previous year. The end of the recession and the early retirement of baby boomers have helped resurrect the RV industry, which comprises 8.9 million U.S. households. After seeing three years of steady but unspectacular growth, dealerships now expect demand to reach six-year highs in 2013 with a 7.5% increase in sales, equivalent to 310,000 RVs. After seeing 53 RV-related companies consolidate or close during the recession, the RV market is becoming highly competitive again as 23 RV-related companies have entered the market due to the recent escalation in RV sales. CURRENT RESEARCH In this next study, Blueshift assessed whether the RV industry and Thor can expect to see continued growth and whether inventory is sufficient to meet demand. We employed our pattern mining approach to establish and interview sources in four independent silos:

1) RV dealerships (21) 2) Manufacturers (3) 3) Supply chain (2) 4) Industry specialists (4) 5) Secondary sources (4)

We interviewed 30 primary sources and included four of the most relevant secondary sources focused on RV industry growth, a widening RV consumer demographic, Winnebego’s leading position in sales growth, Thor’s dominant market share, and new options that are becoming must-have additions.

Next Steps We will follow up with dealers tracking September’s Elkhart Open House, an annual industry trade conference, to determine if there are any game-changing developments. We will continue to monitor any trend changes in the quality of RV vehicles and check to see if RV staffing demands are being met.

Silos 1) RV DEALERSHIPS Seventeen of 21 sources see motorized sales as stable to increasing with most seeing growth between 10% to 25% year over year and Thor keeping pace with competitors. One source has seen sales decline year over year for the past three months. Three had no comment. Eighteen of 21 sources are seeing towable sales up 5% to as much as 250%, with most lying near the 10% to 25% range with Thor generally keeping trend. Three sources see sales as stable year over year. Two sources said Thor sales were not keeping pace with competitors because of lack of inventory. Inventory, including Thor’s, remains in line or slightly short of demand. Upward sales trends are expected to continue, spurred by more easily available credit, improving consumer confidence and an increased interest in RVs by a wider demographic. Berkshire Hathaway Inc.’s (BRK.A) Forest River Inc. was cited most often as Thor’s main competitor, but Thor appears to be holding steady and even gaining market share.

1 Ferry Building, Suite 255, San Francisco, CA 94111 | www.blueshiftideas.com 2

http://www.gloucestertimes.com/business/x319983104/RV-industry-rebounds-from-recession

http://www.rvbusiness.com/tag/elkhart-rv-open-house/

http://www.forestriverinc.com/


RV Industry

KEY SILO FINDINGS Motorized Sales

- 11 of 21 sources reported sales as increased year over year for the past three months, most specifying a 5% to 20% range. 4 reported sales as down. 2 have seen sales as flat. 4 had no comment.

- 13 of 21 sources reported July sales year over year were up an average of 15% to 25%. 4 said sales were flat. 4 had no comment.

Towable Sales - 13 of 21 sources said sales for the past quarter were up and average of 15% to 30%. 1 saw sales decrease. 2

sources see sales as flat. 5 had no comment. - 10 of 21 sources said July sales year over year were up an average of 10% to 20%. 3 sources see flat sales. 8

sources had no comment. Inventory

- All sources report inventory in line with demand or too slim to meet demand. - Only 1 source reported Thor shipping more than demand, but that was in the beginning of the year and has since

been rectified. - No sources accused Thor of ‘stuffing the channel’.

Open House/2014 - There are no unusual expectations for Open House 2013 and 2014 sales are expected to continue their upward

trend. Competition

- Forest River was cited most often as Thor’s main competitor, but Thor appears to be holding to gaining market share. - 1 source said Forest River was more responsive to consumer wants than Thor.

Miscellaneous - 1 source believes Camping World is in Thor’s pocket. - 1 source complains about the lack of quality products in the industry, calling out both Thor and Forest River. - 1 source reports his dealership needs to make repairs on newly delivered Thor RVs and considers itself the last stop

on the production line.

1. VP of corporate sales of large dealership with multiple locations in several states

Sales over all locations are positive and significantly up to last year in both motorized and towable RVs, with towables on a slightly higher trend, and categories of motorized, Class A and gas units, outpacing the general trend. Thor sales are in line with the general trend. Inventory levels are higher compared with last year and maybe the industry in general is slightly overstocked, but dealers need to stay ahead of the curve. Increasing sales are likely to level off at around 5% and maintain steady growth for the next couple of years, assuming economic and banking trends remain stable.

Motorized Sales “Motorized sales are up 5% to 15% compared to last year with Class A and gas units leading that trend and Class C

and diesel units on the lower end of the trend. Thor unit sales are right along the same trend. Consumers do not really differentiate between manufacturers on the lot, and our salespeople do not steer customers to any one brand.”

Towable Sales “Sales of towable units are up 10% to 15% with fifth-wheels at the top of the trend, and June and July sales have

been very similar. All the manufacturers brands fall in line. Thor has several lines with Keystone, Dutchmen, Airstream and there are more and less popular lines among them. But overall Thor has very similar offerings to other manufacturers.”

Inventory “From an industry-wide perspective, dealers are overstocked slightly on motorized units. My dealerships are pretty

close to the increasing trend. We are seeing good movement in the industry, but demand is such a hockey stick [it will increase to a degree then level off], we still have to stay ahead of the curve. A dealer would rather hold a unit longer than planned than miss a sale because he did not have anything to show.”

“Overall our inventory on the towable units may be slightly higher than planned. Thor is also a bit overstocked, but it


http://www.campingworld.com/aboutus/

http://www.rv.org/fifthwheel.htm

http://www.keystonerv.com/%E2%80%8E

http://dutchmen.com/

http://www.airstream.com/

RV Industry

will be a temporary situation as the sales catch up. [Thor] just has so many available brands and models that in order to keep a nice variety of names and floor plans, we keep a lot of units on our lots.”

“Our industry is set up such that we do not get anything we have not ordered. Now there is a lag between orders and deliveries and there is a backlog program. Sometimes a dealership may push back a unit they originally ordered. Manufacturers would always like dealers to keep more units on hand, but they do not ship units that were not requested.”

Open House/2014 “I see no reason to expect any huge impact from the Open House season this year. Since we do it every year, the

increases are year over year compared to the same event. We will see some new floor plans and décor will vary a bit, but I do not see any new innovations that will drive the season.”

“As long as banking is lending, and the economy and job growth continue, we will maintain a growth trend like we have seen over the last two to two-and-a-half years now. It will level off from these peaks and land probably around 4% to 5%, but it will last another 18 months to two years. Maybe longer.”

“It is a cyclical industry and will remain that way. We are making up ground we lost when the bottom dropped out in 2008, but we are not yet back to our pre-2008 sales levels.”

Competition “All four of the major manufacturers make almost the same product. They all trend in the same range and no one

stands out either as best or worst really. They have the same customers and the same price points. Customers are not generally brand loyal, they are just looking for a deal on the unit that suits them.”

“Dealers and manufacturers end up in sort of an adversarial relationship. Manufacturers want to push more units onto the lots, and dealers push back. Customer complaints come to the dealer first and they go to the manufacturer, and there is always frustration and conflict. But in the end all of the four companies honor their warranties and stand behind their products.”

Miscellaneous N/A

2. Sales manager of a western RV Dealership

Dealership is seeing all positive trends and benefiting from a risk it took in January by increasing orders for inventory before the increase in sales materialized. Thor is ahead of the competition for delivery of orders, but all manufacturers are behind and deliveries are too slow. Still, demand is increasing and people are more willing to invest in their lifestyles, taking early retirement, even selling their homes and going out on the road.

Motorized Sales “Our sales of both towable and motorized RVs are up 100% compared to last year, for July and the quarter so far,

and Thor units are selling right along that same trend.” “We sold only one motorized Thor RV last July, and we have sold five so far this year. Is that 500%?” “We have more [motorized RVs] on our lot than we did a year ago, and availability of motorized RVs is limited in this

region.” “Demand is really the issue. No one [manufacturers] hired or expanded operations over the last four years. Now that

demand has picked up, they are all behind the eight ball.” “Fleetwood is really the dominant motorized RV in this region recently, but they do not make any towables.” Towable Sales “Thor-branded [towable] units are selling upwards of 35% to 40% over last year nationwide. The difference is they

[Thor] are working hard, busting at the seams, trying to catch up and keep up with demand.” “Most dealerships are stocked up pretty well on towable units because they turn faster, and there is less capital

invested.” “The competition in towables is tighter. Plenty of units are available, they are well priced and offer great features.” “We have Thor, some Keystone and Alpine units, also Dutchmen and Heartland on our lot right now.” Inventory “Our motorized inventory is probably 30% too light in July, and we planned to have 12 more Thor units on hand this

summer, so we are probably still below our plan for [Thor motorized] inventory.”


http://www.fleetwoodrv.com/

http://www.heartlandrvs.com/

RV Industry

“Our towable inventory is right on track for July, but only because we planned well and ordered way more in January than we did last year. We just ordered more instead of waiting for the sales to happen to increase ordering. We took a bit of a risk and it played out in our favor.”

“Thor is definitely not stuffing the channel. We are still waiting three months for [Thor] order fulfillment, but orders are more like 17 to 20 weeks out for everyone else. It still takes too long to fill orders, but Thor is doing better than the rest of the industry.”

Open House/2014 “We expect to end 2013 with sales up about 75% over last year. That is our projection anyway.” “I have not had enough exposure to the 2014 models to have any feedback yet. It will be November before we really

start seeing anything on those models.” “We are anticipating and planning for significant industry and sales growth over the next five years. This dealership is

purchasing land for more lots in order to increase our available inventory.” Competition “Thor performance is very similar to the competition, like Forest River. Winnebago [Industries Inc./WGO] outpaces

Thor for motorized units, but they [Winnebago] take too long to fill orders. Tiffin [Motorhomes Inc.] would do better if they could keep up with demand as well.”

“People are not making anything on their investments any more, so they are considering the alternatives, investing in their lifestyle more, maybe even moving up their plans to sell their house and go on the road.”

“We are seeing lots of first-time buyers looking at entry-level towable RVs ... More baby boomers and lots of government retirees are taking advantage of their golden parachute retirement plans now because of government cutbacks.”

Miscellaneous N/A

3. Inventory control manager of a coastal RV Dealership

Source is encouraged to see more first-time buyers entering the market, with sales of towables outpacing motorized units somewhat, but all are selling significantly better than last year. Thor may have an advantage as Winnebago inventory runs lower and replenishments take longer.

Motorized Sales “Our motorized sales are up 20% compared to last July and up slightly more

than that looking at the quarter.” “The increase in demand is just because people are settling down, getting

more confident. They want to take advantage of the lower interest rates before they go up. Even fuel prices are stabilizing somewhat.”

“Thor motorized sales are right down the middle, not the high end, not the cheapest base models, and doing very well, increased around 20% to 25% to last year.”

“Winnebago [motorized] sales generally outpace Thor, but Thor could benefit from Winnebago’s slower production as stock sells through. Thor is averaging around three months delivery and Winnebago is currently running five months or more.”

“There is some crossover for customers depending on what they have and what they want to spend. For instance, a high-end fifth-wheel is $130K while a lower-end motorized unit is $80K. Sometimes the difference is if you already have a truck to pull it with, or if you will have to invest in that too.”

Towable Sales “We are seeing a lot of first-time buyers entering the arena and they have more ability to purchase a towable unit,

generally.” “Towable sales are up 25% to 30% over the last few months and Thor units are following the same trends.” Inventory

Demand increased faster than any of the manufacturers were expecting, and our inventory of motorized units is low—not too far off, but lower than planned. Our [inventory of] Thor motorized units [is] really pretty much on track.

Inventory Control Manager Coastal RV Dealership


http://www.winnebagoind.com/%E2%80%8E

http://www.tiffinmotorhomes.com/%E2%80%8E

RV Industry

“Demand increased faster than any of the manufacturers were expecting, and our inventory of motorized units is low—not too far off, but lower than planned. Our [inventory of] Thor motorized units [is] really pretty much on track. We invested more heavily in the towables and it has paid off so far.”

“We have not changed our ordering with Thor or anyone else. It is all based on demand. We get what we order in three to five months. All the manufacturers are competitive with special offers and promotions. Thor is no different.”

Open House/2014 “I expect our 2013 results will be 20% to 30% ahead of last year, and Thor sales will run in that range also.” “It is too early to comment on 2014 models. We will start seeing sales of those models pick up in late November and

December.” Competition “Forest River [towables] and Thor sales are similar. Winnebago [motorized] is a little slower. They are higher end,

more expensive and sales are up slightly less than Thor, around 20% to 25% but our remaining inventory is lower and replenishments are slower from Winnebago.”

Miscellaneous N/A

4. Long-time owner of an RV dealership in Kentucky

Motorized RV sales have skyrocketed for this Kentucky dealership for the past three months, year over year, and towable sales are also up significantly. He expects sales to remain brisk for the remainder of the year. His dealership is low on motorized RV inventory (not Thor, which he does not carry), but his towable inventory is good or just a little light. His dealership has not changed its ordering patterns with Thor, and he says Thor offers discounts to large dealerships, but not to smaller dealers like his own. He believes Thor can maintain growth for a short time but that the industry could see some shifting in positions soon. Forest River products are selling well.

Motorized Sales “Motorized RV sales are up 27% in July, compared to July 2012.” “Motorized RV sales over the past three months are up 20% compared to the same three months last year.” Towable Sales “Towable RV sales are up approximately 15% this July and for the past three months, compared to same time

periods last year.” “Sales seem to be brisk in 2013.” Inventory “Our current motorized RV inventory is too little for the seasons.” “I do not handle Thor motorized.” “Our current towable RV inventory is good to light for the season.” “Our current towable Thor inventory is low for the season.” “Thor is shipping RVs just as we order them.” “Our ordering from Thor today is about the same as in the past.” “Thor seems to be offering deeper discounts to the larger volume dealers than smaller dealerships like ours.” Open House/2014 “Next year’s models have good eye appeal and reasonable value.” “We may buy some extra inventory at this year’s Open House.” Competition “Forest River has been moving very well. We do not stock Winnebago right now, but we may again the future. The

Thor product has a little slower turns.” “Due to the size of company, I believe Thor will be able to maintain growth at least until our local state show. At that

time, I think we may see some shifting in positions.” Miscellaneous N/A


RV Industry

5. Co-owner of a Midwest RV dealership

Motorized and towable sales have increased 20% to 25% in July and over the past three months, in comparison to the same periods last year, and he expects 2013 to rise about 30% in terms of overall sales. His dealership is having one main problem though: a lack of motorized inventory. Thor is unable to provide product and there is a three-month backlog. So he is ordering products from Thor but cannot get them. His dealership also sells Forest River towables and they are selling well. He still believes Thor can maintain its sales growth as long as it provides products to the dealerships, and currently that is not the case.

Motorized Sales “Motorized RV sales in July are up 20% compared to July 2012.” “Motorized RV sales over the past three months are up 25% compared to the year-ago period.” “Thor motorized sales in July are up 20% from July 2012.” “Thor motorized sales over the last three months are up 25% compared to the same year-ago period.” Towable Sales “Towable RV sales are up 20% in July compared to last July.” “Towable RV sales are up 20% in the last three months compared to the year-ago period.” “We expect the rest of 2013 to be up about 30% in terms of overall sales.” Inventory “Our current motorized inventory is too little—we cannot get enough.” “We have almost no Thor motorized inventory in stock. Thor motorized is unable to provide product—there is a three-

month backlog.” “Our current towable RV inventory is about right. We are pushing out the 2013s to freshen up at Open House. We do

not handle Thor towable.” “No, Thor is not shipping more than we are selling.” “We are ordering more motorized from Thor, but cannot get them.” “No, Thor is not offering special discounts, promotions or cheap financing.” Open House/2014 “We have some 2014 models and the improvements look good.” I look for some deals [at Open House] because a lot of dealers are right-sizing their towable inventories.” Competition “We sell Forest River towables and they do very well. Winnebago is doing well, but in our market we outsell them with

Thor motorized.” “Thor can maintain its sales growth, but they have to be able to produce enough to keep the dealers’ shelves

stocked. They are not able to at the moment.” Miscellaneous N/A

6. RV salesman at a southeastern U.S. dealership

Dealership only stocks new Thor motorized units, no competitors, and sales are up in July but still below last year’s sales for the quarter. New Thor towable sales are off a bit compared with last year because so much used inventory is available on the lot, more than last year at this time. Deliveries on Thor units are reasonable at six to eight weeks for motorized units and four to six weeks for towables.

Motorized Sales “Motorized sales are up 10% in July compared to last year but still off around 20% for the three-month period. Our

season really starts later typically in June and July. We only have new Thor motorized units available right now.” Towable Sales “Our towable sales are pretty flat [compared] to last year overall, and Thor units are off maybe 3% to 5%. We

probably have fewer Thor units on hand compared to last year, because we have so many more used units available and they are selling well.”

Inventory


RV Industry

“Our inventory levels are on track and reasonable for all categories now. We can get motorized Thor units in six to eight weeks and towable Thor units a little faster, in four to six weeks. They are turning well and it is not a problem to get restocked.”

“We have not changed ordering with Thor, though we intentionally ordered a little less so we have more room for other lines and more used units also.”

“Their [Thor] reps were really aggressive last year and always want us to order more, but that is nothing new, and really all the reps do the same things.”

“It is an aggressive industry in terms of promotions, but they all do the same things. Thor is just like the others. Sometimes we start getting more bonuses to sell the remaining 2013 models starting in September and October.”

Open House/2014 “I expect we will end the year up 10% to 15% over last year.” “It is pretty typical to start promotions on the current year models when the

new ones start coming off the production line. I do not see any compelling reason to expect this year will be any different from last year.”

Competition “We do not currently have any new Forest River or Winnebago units available, and Thor is our only motorized line in

new inventory. We do have used units available, but price is really the primary factor between new and used, not brand.”

Miscellaneous N/A

7. Founder and CEO of a West Coast RV dealership

His dealership sells Thor products but has nothing but problems with the company and that affects his own customer loyalty. Despite the fact that motorized sales are up 35% this year and towable sales are remaining stable from 2012, he is very disgruntled with this industry, which continues to produce low-quality products that break down or do not function properly. His dealership carries many Thor products, but he is not happy with the company’s recreational vehicles or its customer service. Still, he expects a good rest of the year, and notes that Thor motorized products are difficult to obtain. He is starting to order Fleetwood products and searching for a mom-and-pop company that produces better RVs. For the 2014 models, he sees little innovation except some attractive cosmetic changes. He believes Thor could lose market share to Forest River unless it starts to build better quality products—or even just slightly better. Forest River caters to that lower price-point consumer and Thor needs to bolster its offerings to remain competitive. Overall, his dealership is having a great year in terms of sales but problems and headaches of running his dealership are huge.

Motorized Sales “Sales are up overall in this year. We sell about 80 RVs a month. A year ago we were averaging 50-ish. We are

up about 35% this year.” “My projection is we will continue to see 30% to 35% growth this year. Most of our growth is coming from the

motorized.” “In 2012, our market was off 72% from the 2006 highs, so we were way, way down. So those stores today that

are still in business are starting to see an increase in sales. The percentage of people buying an RV is way down, but stores that are remaining open are seeing significant increases.”

“In the past we have been carrying Class Bs and selling rentals that are As, Bs and Cs and have been in the consignment business; 50% of our sales are consignment, and 50% of those sales have been motorized.”

Towable Sales “Towable RV sales this July are about the same as in July 2012. The increase has really come in motorized. The

towables have stabilized, and that is true for Thor towables too. Everything in towables that we are selling is Thor. We are selling Colemans, which is a Thor product. It has long-term brand identity. People are buying Heartland products because they identify with the brand.”

We do not currently have any new Forest River or Winnebago units available, and Thor is our only motorized line in new inventory. We do have used units available, but price is really the primary factor between new and used, not brand.

RV Salesman Southeastern U.S. Dealership


http://coleman-rv.com/

RV Industry

“Towable sales this year have been about the same as in 2012.” “Our economy is starting to stabilize and this year we will see a 35% increase in sales in general [for all

products]. We will go from a $25-million store to a $32-million store. We are on track for that kind of increase.” Inventory “We are in a good position with our towable RV inventory. We are almost exclusive Thor in towables.” “We have a lot of Thor motorized products on order, but they are hard to get. Their production is always behind. We

would like more Thor inventory.” “We probably have $4 million in Thor product at wholesale.” “Thor is capable of shipping more than we are selling, but Thor is not

shipping more than we can sell. We do not order that way. We do not bury ourselves. We usually carry a good day’s supply of inventory. We believe you have to have it on the shelf to sell it. If you are dealing with a minimum, customers do not want to buy the only one you have got.”

“We have been having trouble getting Thor motorized products. But I can tell you that Thor motorized sales are up. Everything we put our hands on is sold. These RV manufacturers build a good-looking product. They look great ’til we go to use it. I have had a customer say, ‘Every time I take this RV out something breaks.’ But we are hearing that Forest River is worse than Thor. I would like to find a good mom-and-pop company that likes to build a good quality product.”

“We are ordering from Thor more cautiously and we are much more critical of the factories in relationship to the quality of what they are producing.”

Open House/2014 “I have only heard a little bit about next year’s models.” “We just took on Fleetwood. I have been told that it is a much more dependable than Thor.” “For the 2014 lines, what we have seen is pretty much what we have always seen—different colors and décor but

nothing new. Everything is built the same. We are not seeing any innovations. We are getting 2014s in now and they look better. Heartland came in and spiffed up their product but it is no better—it is just better décor and colors. It is all cosmetic, no innovation, no desire on their part to modify change. None. Zero. If you look at a Thor Montana by Keystone, the product has had no innovation in the last five years. They have different fabric on the seats, but as far as construction improvements—zero.”

“My expectations of the Open House season in September are low. But we are going there and will buy $3 million worth of product. We are a strong store and we will continue to sell, and we think this will be a good selling year.”

Competition “Right now in another year I will be surrounded by four other stores.

Advertising is still aggressive. These new stores will come into our market and devastate us, and we could be in trouble again. It is so important to build that customer loyalty and that is why it is so important to build a reliable product. We do not have that. The industry does not care. They do not care about servicing it. They do the minimum they can to get by with it and that is a formula for long-term death.”

“Winnebago builds a great high-quality product. Their procedures to get warranties handled are exceptionally good. However, they use the same junky components as everyone else uses—heating systems, major problems. But they are building a much better, constructed coach.”

“Thor builds products and they figure out what people want to see, and that is why Thor is the No. 1 in the market. They have a ton of different brands, a ton of different dealers, and they know how to use the right colors.”

“I know that Forest River is taking more and more of Thor’s market share. If you take Heartland’s quality of Thor’s companies, I think you would see a net loss. Forest River is taking more market share not because they are building a better product.”

“When we went to the Open House last year we looked through all of the Thor and Forest River products and looked at other products—Jayco [Inc.], et cetera, and quite frankly, I thought Thor had the best-looking stuff. They hit the

We have a lot of Thor motorized products on order, but they are hard to get. Their production is always behind. We would like more Thor inventory.

Founder & CEO West Coast RV Dealership

When we went to the Open House last year we looked through all of the Thor and Forest River products and looked at other products—Jayco [Inc.], et cetera, and quite frankly, I thought Thor had the best-looking stuff. They hit the market. Their small motor homes are much better looking. Forest River has found some niches, and they are much more reliable than Thor.

Founder & CEO West Coast RV Dealership


http://www.keystonerv.com/montana/

http://www.keystonerv.com/montana/

http://www.jayco.com/%E2%80%8E

RV Industry

market. Their small motor homes are much better looking. Forest River has found some niches, and they are much more reliable than Thor.”

“Thor has got to start to do something other than pound the price. They have to start to think quality. So no, I do not think Thor can maintain its sales growth as competition in the RV industry heats up. I think Forest River will build a cheaper product that is junkier, and will continue to steal the low-priced point. So Thor has to figure out whether they want to continue fighting that low price, or build a 5% better product. People are willing to spend more money.”

“In the consumers’ eyes $1,000 can make a big difference in customer satisfaction.” Miscellaneous

“This market is always evolving and I think if gas prices can go up with the cost of living and if the gas companies stop gouging Americans, then motor homes will stabilize. People really want to buy them. A diesel Class B, which is the smallest model you can buy, gets 22 miles per gallon, and a full-sized Class A will get about 11. Not bad for a big motor home.”

“The longer you are in this industry, the more accepting you become with low quality. And that is a real problem—that is about the time the Japanese and the Chinese come in and beat the **** out of us. This market is primed to come in from another country. This industry really builds bad products, generally speaking. So it is always about choosing the best of the worst, the best of the bad. It is terrible.”

“When a Thor product comes in, especially a gas product, it comes in with a punch list of 30 to 40 things that need to be fixed before we can put it on the line. It is terrible. After a while you get numb to it, and the expectation lowers. It is a real problem with Thor but also a problem with all other RV manufacturers.”

“I never wanted to be a Thor dealer. We started out with Fleetwood, but this was the only franchise we could get. And we sold Fleetwood and they sold real well. It was a California company, and when Fleetwood went belly up, we did a lot of due diligence and decided Heartland was the company we wanted to come in, a family-owned company, the sixth largest builder in the country. They were only in the market for six years, but everyone was rushing to them. They started to cut into Thor’s business, so Thor came along and took them out and bought them. And ever since then we have seen every single shipment with problems. So I am selling junk like everyone else.”

“They blame everybody down the line. And that is exactly the way the consumer looks at this. They do not know the kinds of frustrations we have. We all suffer all the way down the line.”

“Fellow dealers are telling me, ‘Hey, it is just the way it is.’ And Thor is the purveyor of the biggest amount of junk— Thor and Forest River. And they are the guys who will try to buy things for the cheapest price …”

“Thor is not responsive. The industry is so backwards in comparison to the auto industry. It is a night-and-day world. Auto parts departments, depots hold large inventories of parts. In our industry it is not the way it works. If we have an RV that comes in with a problem, we have to take a picture of the problem, and the service writer has to write what happened, why it broke, and what needs to be repaired and how they will go about repairing it and how long they will be repairing it. … Every time a part is shipped, it is a different, low-quality grade. So we are waiting for parts to come in and the part then has to be shipped to Thor and Thor checks the part in and sends the part to us and that takes a minimum of three weeks. When we get the part, 20% of the time the part is the wrong part, so 20% of our customers are waiting another three weeks. A repair in an RV store can average one month, waiting for parts, waiting for approval, and communicating and calling, and following up again, asking, ‘Where’s the part?’ It is wearing us out.”

“They are building junk on one hand, and shipping trash on the other hand. It takes us a month to get product. The industry needs to be absolutely overhauled.”

“The Recreational Vehicle Industry Association has lulled themselves into ‘la la land.’” “We have a pre-delivery checklist, where you have to check that everything works, that all of the components are

functional, your cabinets are lined up, the floors do not squeak, the windows do not leak. We are doing all of these inspections. That is a requirement. Other dealers are cutting corners because the Internet has driven their prices down and margins are low and so they want to move the merchandise, and they do not have the money to properly service the RV when it comes in and they do not properly service it when it goes out. Money does not drop out of trees.”

“Thor typically offers discounts and promotions going into winter or during winter. Typically, a factory will not build a lot, meaning a storage lot. They will not overbuild.”

“In this industry, nobody wants to say much about problems, but customer satisfaction is very low. Probably about 10% are repeat buyers, but we should have a much higher number than that. People are jumping from brand to brand.”

“When Heartland was owned by Heartland and we had a customer that had a water leak in a roof, I could call Heartland and they would send someone down right away. They had a good attitude. With Thor, I call them and say,


http://www.rvia.org/%E2%80%8E

RV Industry

‘Hey guys, I have a water leak in a roof and customer is out of warranty a day, and they will say, ‘Sorry, they are out of warranty, and that is our policy.’”

8. General manager at a western-state RV dealership

Motorized and towable RV sales are up both in July and over the past three months, compared with the same time periods last year. Thor motorized sales have risen significantly this year, and as a result, his dealership is ordering more from Thor than it did last year, including some newer lines. He attributes this uptick to the economy, and to the fact that banks are now lending money again to consumers for big-ticket items. He believes Thor will continue to maintain its sales growth despite competition. Forest River may be losing market share. Overall he is happy with Thor’s products and client relations, except for the company’s Dutchmen division, which has slow customer service.

Motorized Sales “Motorized RV sales over the last three months compared to the same three months last year are up.” “Thor motorized sales in July are also up compared to July 2012.” “Thor motorized sales over the last three months, compared to the same three months of 2012, are significantly up.” Towable Sales “Towable RV sales in July and over the last three months, compared to the same time period in 2012, are also up.

Thor towable sales are up for these time periods.” “RV sales this July compared to July 2012 are better.” “We are ordering more from Thor now. For the most part our sales are good and we have picked up some newer Thor

lines.” “I am anticipating we will see a slowdown in August and September. Those

months will not be as good as July. The industry is relatively seasonal, so we will see a steady decline, but that is normal.”

“But month to month, when comparing year to year, we will continue to be higher than the previous year.”

“There is a significant demand still in the marketplace and job seekers have found jobs, and for the most part the banks have become much more willing to lend money again where previously they had clamped down. Now we are starting to see more banks become more willing to loan money to customers. Over 90% of our customers go through financing.”

“Yes, Thor Industries can maintain its sales growth in the next few years, as competition in the RV industry heats up. The RV industry is very cyclical, and there are always consistent ups and downs.”

Inventory “Our current motorized RV inventory is maybe a little light. Thor is the only motorized brand that I sell.” “Our current towable RV inventory is very good, right on track.” “Our current Thor towable RV inventory is very good, right on track.” “No, Thor is not shipping more than we are selling. I have a problem keeping inventory in stock. We are seeing much

more in the way of sales than can be produced in a timely manner.” “Thor’s discounts and promotions are usually programmed to go with Thor products. There are discounts for us to

buy the product.” Open House/2014 “We are going to the Open House in the last week of September, but I have not seen next year’s models yet.” “We will see more growth this year and the vacuum we saw from the manufacturers that went away in the last

downturn has been filled by the current manufacturers expanding their lines, so I do not think we will see a lot of new stuff at this Open House. We will get some redesigned product and Thor has been doing a good job of keeping their stuff relevant and fresh. My only problem that I ran into with Thor motorized is the chassis allocations. It is difficult to get them. Thor puts them on allocations.”

Competition

No, Thor is not shipping more than we are selling. I have a problem keeping inventory in stock. We are seeing much more in the way of sales than can be produced in a timely manner.

General Manager Western-state RV Dealership


RV Industry

“I do not think Forest River is growing. If anything, they are going backwards a bit in market share. They still build a good product and still have a large chunk of the market. Thor builds a lot of different stuff. Winnebago, I do not run into that much—they are kind of in a different price point on the Class C, $15,000 to $20,000 more.”

“Thor does a good job. I am happy with them. They are one of the most efficient in the dealer-relations side, in terms of warranty claims and ordering parts. Their Keystone and motorcoach divisions are good. Their Dutchmen division is lacking. Sales are great, and the product looks great, but they are slow in customer service. Thor is a parent company that holds a bunch of divisions—Airstream, Keystone—and they all pretty much run independently. Forest River has different divisions and we order parts through each division, but all of their warranty is paid through Forest River Inc.”

Miscellaneous N/A

9. Owner and president of a southern RV dealership

Motorized sales and towable sales are up slightly this year compared to last year, but this is no thanks to Thor. He is depleting his Thor inventory because he is unhappy with the company. A few years ago Thor decided to subsidize Camping World, one of his competitors, who was at risk of going belly up, and thus his dealership is gravitating toward other RV company products, such as those made by Forest River. Towable sales are up about 8% year to date, thanks to a few good recent months. He believes Americans are tired of waiting to spend money and have decided to live their lives regardless of financial hardships. He expects Open House business to be high in September and 2013 to be a good year. But he also predicts Thor will lose market share to the competition. Overall industry quality is shoddy and he is searching for better products and better customer service.

Motorized Sales “Motorized RV sales in July are up a little bit, but nothing to write home about. It is an incremental increase, single

digits. No dealers right now are out buying a ton of motorized, throughout the country.” “If you go back a month ago, I would say motorized RV sales were down, but we are starting to see them come back

a little in single digits, nothing big. But by the time I get through July we will probably have an 8% to 9% increase.” “We are not a big Thor motorized dealer.” Towable Sales “Towable RV sales in July and over the past three months are good compared to last year. The last three months are

as good as I have seen in five years. In the first five months of the year, our towable sales were down 11% from last year. What we are seeing right now is by the time we get through July, we will have improved our position up 7% to 8% year to date—so for the last two months we have really been cranking.”

“Through July we will probably be down a little bit in Thor towable sales, in single digits, because we are refocusing our energy.”

“It is our busy season and we should be doing well. I have a theory about the American public: The people I talk to are weary of holding off spending and the world is what it is, and they may as well get on with life. They are very frustrated with government and where America is in the world. They are breaking out of their shell.”

“If it stays like this, I will be pretty delighted this year. By the end of the year we will be about 15% to 20% ahead year over year. My gut tells me nothing. The economic indicators say we are going to revert back. Everything says this little burst will not stay. We are planning accordingly.”

Inventory “We have about the right amount of inventory. A month ago we had too much, but our sales were down from last

year in total through May, not a significant number, but they were down. And we have seen a huge pickup since then. Year to date, by the end of July we will have exceeded the first seven months of last year. Our inventory is about right for what the market is doing right now.”

“I am pretty much out of Thor motorized. We are moving some of our business away from Thor, because Thor made a critical decision several years ago to fund our competitor and subsidize Camping World and their operations, at about the low point of the marketplace. They did not do anything to help out their independent dealers. We were bottoming in the marketplace and every dealer was in the same boat. Camping World was probably on their way out of business and Thor loaned them $30 million and they guaranteed their flooring. Thor did not do that for me. That gave Camping World an unfair competitive advantage. While I was taking assets out of my own pocket, Thor was


RV Industry

propping up my competitor. If Camping World would have gone out of business, Thor would have had to buy back all of that inventory.”

“Our current towable RV inventory is right for this time of year. It is right across the board. Our current towable Thor inventory is down from what it was but is about right for the business that we are doing. It was a conscious decision for us to move away from Thor.”

“No, Thor is not shipping more than we are selling. They might be elsewhere.” “We are backing off on our inventory with Thor and replacing it with some other brands, Forest River products

primarily. We are looking for better quality and better dealer and customer support as well.” “If Thor is offering special discounts, promotions and cheap financing, I am not aware of them, but they did offer

some floor-plan assistance during the winter time.” Open House/2014 “My first impression of next year’s models is that they come out way too early. We started seeing 2014s some time

ago, in March. That is way too early. The products do not change much. They really start changing after the Open House in Indiana.”

“The Open House will be very successful this year if summer continues the way it has been. Business will be good from it, more and more every year.”

Competition “Forest River is in the right spot right now. They are more aggressive than anyone else out there across the board,

and are doing very well against Thor. They have the same kind of quality issues and lack of dealer support that everyone else does, though. Winnebago is still charging a premium price for their product. This is a very competitive industry.”

“It is going to be very difficult for Thor to maintain its sales growth as competition heats up. They could lose some market share.”

“The quality in our industry is nothing compared to what it should be. I came from the motorcycle industry, and we were very high quality. For most of the RV industry, the quality is mediocre at best. There is a small handful of players that are good and they are generally good, but in the low- to mid-price segment, quality is lacking, and that includes Thor and Forest River. Winnebago is very high quality.”

“I wish we could upgrade our quality. The biggest complaints you hear is about the quality. I was in dealer operations previously and we did everything we could to support the customer and nobody else does this. Winnebago is as close as possible.”

Miscellaneous N/A

10. Sales and marketing administrator at a California family-owned dealership

Motorized and towable sales have risen for this large dealership over the past three months, compared with the same window in 2012. Thor’s towable Dutchmen vehicles have steadily increased in July and over the past three months, in comparison to last year. She expects to see a steady increase in RV sales for the remainder of 2013 and predicts that Thor’s products will continue to generate sales. She praises Thor for its innovative design and building vehicles that are appealing to consumers, and is eagerly awaiting September’s Open House. Forest River is a viable competitor in this market as well, offering equally innovative products.

Motorized Sales “This year motorized sales have risen in July, in comparison to last year.” “Motorized RV sales have risen [over the last three months] in comparison to last year.” Towable Sales “We carry Dutchmen, which is a division of Thor. Dutchmen offers many incentives throughout the year to help boost

sales.” “We have seen an increase in towable RV sales in July and in the last three months, compared to the same time

frame last year.” “Towable Dutchmen sales have steadily increased in July and in the last three months, in comparison to the same

time last year.” “We expect to see a steady increase in RV sales for the remainder of 2013.”


RV Industry

“Thor has a lot of experience in the RV industry with having innovative designs and building on what works. Their products have consistently risen in sales and I would expect that to continue.”

Inventory “Our current motorized inventory seems to be in line with the market’s demand.” “Inventory for our towable lines is on track with current demand.” Open House/2014 “Next year’s models appear to have fresh floor plans, color schemes and designs.” “At Thor’s Open House this year we are excited to see an incredible lineup of all the 2014 Dutchmen products.” Competition “Forest River towables are definitely good competition for the rest of the industry and are keeping up well with Thor

products.” Miscellaneous N/A

11. General manager of company with 2 locations

Overall sales are up significantly over last year. Motorized sales have really picked up over last year, when towables were selling strong coming into the year and have continued a positive growth trend. Thor sales are in line with the overall trend. The biggest driver of motorized sales is in the mid-range prices, with the high-end and the entry level sales more stable than last year. On the towable side, high-end fifth-wheels are driving results. Thor may be more aggressive than other competitors on promotions for the towables, especially fifth-wheels, but maybe softer than the competition on motorized promotions.

Motorized Sales “Motorized sales really peaked in June this year at up around 10% to 20%

to last year. July is on track to meet that increase. May was a growth month, but not quite as strong.”

“We went through a big recession and motorhome sales were stagnant, but we are just seeing them begin to pick up significantly. We are seeing the biggest movement in the mid-range motorized RVs, the Class A gas and the bigger Class C diesels. The high-end luxury models and the entry-level unit sales are relatively flat year over year.”

“We sell Class A Palazzo and Class C Four Winds by Thor and both are good sellers—up 10% to 20% to last year.”

Towable Sales “We carry a larger volume of towables overall and our biggest movement is

in the high-end fifth-wheels like the [Thor] Keystone Alpine, Avalanche and Raptor. Sales growth is up 15% to 20% to last year and Keystone is probably the largest volume in those numbers.”

“We are not up to our 2004-2005 selling volume yet, but June was our best month on towable sales since 2007.” Inventory “We have learned that inventory management is the key to success in this industry, so we watch closely and try to

have just the right inventory to match sales volume.” “Overall I would say our inventory on hand is right on track, but there are a few units I cannot seem to keep enough

of, like the Class Cs, I am a little light. But my overall motorized and towable are good.” “Thor is not trying to overstock our dealership. It is not a problem at all. We are seeing more sales, so we are

ordering more units to keep up, but nothing has really changed with orders to Thor or anyone else for that matter.” “Thor may be more aggressive than the industry standard on promotions for fifth-wheels, but probably a little softer

on promoting motorized units. I would say they are pretty average otherwise.” Open House/2014 “I expect we will end the year up around 15%. Sales are peaked right now and they will come off that some, but it

has been a good year, and I expect on a year-over-year basis, we will see the year end on a very positive note.” “Too early to comment much on 2014 models. I am not aware of any major innovations and nothing really new is

expected.”

Thor may be more aggressive than the industry standard on promotions for fifth-wheels, but probably a little softer on promoting motorized units. I would say they are pretty average otherwise.

General Manager RV Dealership (2 locations)


http://palazzorv.com/

http://fourwinds-classc.com/

http://www.keystonerv.com/alpine/

http://www.keystonerv.com/avalanche/

http://www.keystonerv.com/raptor/

RV Industry

“We are shifting back into a more Open House-driven sales model. We have worked it out so more of our people go to the Open houses, both Elkhart and Louisville, and spend more time taking advantage of the opportunities there.”

Competition “Really, Thor in general is no better or worse in any way than their competition. Forest River cannot keep up with

demand this year, and their sales are up slightly better than our average. Winnebago is really right in the same trend as Thor motorized on a comparable unit.”

Miscellaneous N/A

12. General manager of a western U.S. family-owned dealership

Towable sales are up at this dealership 15% to 20% year over year, while motorized vehicles mirror 2012 numbers. Overall, 2013 promises to be a very good year for the RV industry, though. His dealerships inventory is right on track, thanks in part to organized planning. He expects to see a multitude of new, lightweight lines at this year’s Open House. And he believes Thor will continue to grow, albeit not at the rapid clip as in past years.

Motorized Sales “Motorized RV sales in July and over the past three months are slightly up from the same periods in 2012.” “Thor motorized sales in July and over the past three months are up compared to the same periods last year.” Towable Sales “Towable RV sales in July and over the past three months are up considerably from last year, 15% to 20%.” “Thor towable sales in July and over the past three months are also up 15% to 20% compared to the same periods in

2012.” “This year is on pace with 2007, which was a very good year for us and the RV industry.” Inventory “Our current new motorized RV inventory is on track.” “Our current towable RV inventory is great, due to our inventory planning. If we were not as organized we would be

lacking many models with high turn rates due to increased demand.” “We carry Thor towables. But for Thor motorized—it is not our business model.” “Thor is offering volume discounts, but cheap financing—flooring none, retail rates none, special promotions nothing

out of the ordinary.” Open House/2014 “In terms of next year’s models, nothing has surprised me yet.” “The Open House is bigger and better every year. I expect to see a multitude of new lightweight lines from every

manufacturer.” Competition “Thor’s business will certainly continue to grow—however not at the same growth rate. The growth rate will be

impressive though. The market was cleansed of many manufacturers during the recession, which provided much opportunity for Thor.”

Miscellaneous N/A

13. General manager of a large Midwest dealership

Thor is the big winner at this dealership this year, as towable sales are up significantly both in July (year to year) and over the past three months (year to year). He expects sales overall to remain strong through Labor Day weekend. While his overall motorized inventory is on track with market demand, his Thor motorized stock is low and his dealership’s towable inventory is high due to a slower spring. As a result, he is ordering fewer towable products, and he expects Thor to offer dealers some finance incentives and package discounts for towables at the Open House in September. Winnebago’s motorized product is outperforming Thor’s motorized product at his dealership, but Thor towables are selling faster than Forest River offerings. He believes Thor can maintain a competitive edge as long as a solid management team is in place, but Forest River is coming on strong.


http://www.elkharttruth.com/article/20120619/BUSINESS/706199945

RV Industry

Motorized Sales “July is not over yet, but up to now motorized RV sales appear to be tracking the same as last year.” “Motorized RV sales are tracking the same over the past three months as the same period last year.” “Thor motorized sales in July are less than last year to date, but July sales could match last year’s sales by the end of

the month.” “Thor motorized sales over the last three months compared to the same period in 2012 are the same.” Towable Sales “Towable RV sales in July are tracking the same this year as last year.” “It is July 17 and we have matched last year’s Thor towable sales. We should be up significantly over last July. And

we are up 25% these past three months over the previous year.” “We expect sales to be strong through Labor Day weekend.” Inventory “Our motorized inventory is on track with the market conditions today.” “Our current Thor motorized inventory is currently low.” “Our towable inventory is high. Our unseasonable April and May slowed

down our forecasted sales.” “Our towable Thor inventory is higher than normal for July.” “We purchased more inventory than normal during the fall RV show last

September and at Louisville in December. Additional orders have slowed, again due to the unseasonable weather conditions in April and May.”

“Re-orders have been less than normal with Thor, again due to our larger-than-normal purchase made at the fall RV show.”

“We have not engaged in any negotiations with Thor on discounts, promotions or financing because of our inventory position at this time.”

Open House/2014 “Overall the 2014 Thor towable and motorized product looks good.” “I am expecting Thor’s towable product to make some changes to motivate dealers to buy, along with some finance

incentives, and along with some package discounts to fill the production pipeline.” Competition “Winnebago’s motorized product is outperforming Thor motorized product at our store. Thor towable is retailing

faster than most Forest River products.” “If Thor can keep a strong enough management team in place they can maintain the competitive edge. Forest River

is producing some great product over the past few years. I believe that Forest River will continue to gain more market share as they continue to develop innovative products.”

Miscellaneous N/A

14. Sales manager of a New England RV dealership

Dealership has recently added Jayco towables to a previously all Thor [motorized & towable] inventory, and the new product line has done very well, with towable sales increased significantly compared to last year. Motorized sales are flat compared with last year because inventory levels are lower than planned. Thor has not delivered units ordered in January, because of a [Ford] chassis shortage in the industry, slowing production. Motorized sales have shifted to more readily available used units as a result.

Motorized Sales “Currently, we only sell new Thor motorized units and sales are pretty flat to last year. The increase for motorized is in

used units, since people are willing to invest but are trying to get more for their money by shopping used, or renting RVs. I am more aware than ever of callers asking about rental RV units, and we do not rent RVs but a local competitor does.”

“We are expecting to add Jayco motorized units to our inventory probably by October, with the new 2014 models.”

Our motorized inventory is on track with the market conditions today. … Our current Thor motorized inventory is currently low.

General Manager Large Midwest Dealership


RV Industry

“We had a slow winter from January to March with lots of snow, and I think it kept people home or down south until the weather broke. Our sales started picking up in April and have been very good since, maybe due to some pent up demand, starting sales later compared to last year.”

“Sandy wiped out a lot of RVs last year, and I think people are still recovering some of that loss too, replacing campers and RVs after the storm damage. They focused on their homes first and now are wanting to get back out on the road this summer.”

“Gas prices are always an indicator for us as well. Gas prices have come down some so our sales tick up incrementally. When gas prices go up, our sales drop off a bit.”

Towable Sales “We have taken on a new line [Jayco] since last year and their results are strong. Overall towable unit sales are up

40% to 50% [during the quarter] to last year. Keystone [Thor] towables are also ahead of last year but only 25% to 30%.”

“Jayco has a great story. They are owned by the Mennonites and I can call them up and get a person on the phone with the power to fix my problem or make a way for us to get what the customer wants. Thor is much more ‘corporate,’ sterile and less available and willing to help us out.”

“We advertise our Thor motorized units but our focus in advertising towables is all on Jayco, which is a new brand for our lot. Jayco put up money for marketing the introduction of their line at our dealership . The marketing program has really helped increase our traffic which is helping our sales overall.”

Inventory “Our motorized inventory is low. We put in orders for [Thor] motorized units in January and still have not received

them. Their corporate line is ‘There is a chassis shortage holding up manufacturing,’ but I bet Camping World is getting their orders filled. But we don’t have anything else unless we sell used.”

“Our towable inventory is up to last year, as planned, in response to stronger sales. Also with the addition of the Jayco line, we have a good investment of units on the lot.”

“Keystone [Thor] is filling orders faster than Jayco, so if timing is the primary consideration, Keystone is the way to go.”

“We are not getting more than we ordered from Thor. In fact, we would like to get what we ordered from Thor. But they may have stuffed the channel at Camping World. It would not surprise me, since they share pockets.”

“We do not have any special promotional offers from Thor right now either. I mean everyone offers good financing and some discounting, but nothing out of the ordinary.”

Open House/2014 “We will end 2013 with strong sales up 40% to 50% over last year. The

addition of Jayco is a big contributor to that success.” “Our winters are harsh and we will basically shut down sales for the winter

by late October, unless it is preorders for delivery in early February.” “It is not unusual for winter preorders on new year models to take four to six months for delivery.” Competition “We do not carry Forest River towables or Winnebago motorized. The only real competitor we carry is Jayco and they

are new this year, selling slightly better than Thor.” Miscellaneous “Camping World is in Thor’s pocket and, no matter what anybody says, I believe those dealerships get preferential

treatment in terms of stock, deliveries, and first service. When Camping World was in trouble a few years ago, Thor gave them a bailout because Camping World is just too big to fail and Thor would be hurt significantly if it did. I know for a fact that smaller dealerships did not get the same deals that Camping World got from Thor.”

15. Owner and GM of a southwestern U.S. dealership

This dealership is the only motorized RV dealership in the area and added the Thor brand towables with a 2013 acquisition of another local dealership. Sales of towables are up significantly over last year, but motorized units just

We are not getting more than we ordered from Thor. In fact, we would like to get what we ordered from Thor. But they may have stuffed the channel at Camping World. It would not surprise me, since they share pockets.

Sales Manager New England RV Dealership


RV Industry

recently started selling. While the source would like to sell through remaining 2013 models fairly quickly, she is concerned that 2014 prices will spike significantly on the big motorized coaches, and that may hurt next year’s results.

Motorized Sales “Sales of motorized have been down this whole year until last week when we finally popped a few. If we are looking

at the three month period motorized sales are pretty flat to last year.” “We are the only [local] RV dealer that sells motorized units so my store is the only game in town in that respect. We

are not a candy store. We stock Tiffin and [Winnebago’s] Itasca new motorized units and we stock Thor motorized units that were previously rentals, so now are sold as used.”

“Now I have sold four or five used Thor motorized units, and that would be up slightly to last year.” Towable Sales “I carry new Keystone and Jayco towables, but I just [January 2013] bought out the dealership that sold the

Keystone, so that is new to me since last year. Sales of towables overall are up 30% to last year, easy, but I was not selling Keystone, so I cannot compare that number.”

“I can tell you why Thor’s numbers are up. It is because they have acquired everybody. Now there is not much competition.”

Inventory “My motorized inventory is almost perfect. I have two big 2013 Class A diesels I’d like to sell, and they are just not as

popular as the gas models since diesel prices are up.” “I have 12 2013 towable models left, and that is pretty well on track. We are getting in the 2014s from here on out,

so that is pretty much on track. I do not want to get stuck with new 2013s when the 2014s are readily available.” “Cougar [Keystone towable] is aggressive with discounting, more than the others. But on the big motorhomes, we

pay a $2,500 delivery fee, and usually some repairs, and we just do not have a lot of profit to play with.” Open House/2014 “I am confident we will end 2013 with sales up 30% over last year.” “I expect the introduction of new models will be pretty much like last year. Well, the big motorhomes are going way

up on prices. That may hurt sales of those units.” Competition “Tiffin is my No. 1 best seller. It is a family operation and has a great story. People feel good about buying their

name.” “Itasca gas coaches are okay, but their diesels are harder to sell.” “Jayco offers a two-year full box warranty and that is just way better than anything else in the industry. And they

service those warranties too. It is not just talk.” “As for Thor units, Montana has the best selling fifth-wheel on my lot. Cougar has nice units for the money, and

Springdale is probably right behind them in sales for me.” Miscellaneous “We are out here representing their [Thor] products to the customers. I have always felt like we are the last stop on

the production line. We get deliveries on these high-dollar units and they arrive like Humpty Dumpty. So we put our service department to work, putting them back together, getting them in ‘new’ condition again, then we fight for warranty dollars. It makes no sense. We need to be able to work together instead of against each other.”

16. President of a southern-based RV dealership

Towable sales have dropped for this southern dealership, while motorized RV sales in July are holding steady, compared with July 2012. He expects sales overall to be flat for the rest of the year. He does not carry Thor products, but says his current motorized RV inventory is on track, while his towable inventory is high due to a slow summer. He’s looking to replace his current towable line at the Open House in September. While he did not elaborate, he believes Thor will be unable to maintain its sales growth down the road.

Motorized Sales “Motorized RV sales in July are the same as last July.” Towable Sales “Towable sales are down in July compared to July 2012.”


http://goitasca.com/

http://cougar.keystonerv.com/

http://springdale.keystonerv.com/

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Future Sales “It appears sales will be flat the rest of the year.” Inventory “Our current motorized RV inventory is on track.” “Our current towable RV inventory is a little high due to a slower-than-expected summer.” “We do not handle Thor products.” Open House/2014 “What I have seen of next year’s models looks good.” “At the Open House season in September, I am looking to possibly replace a towable line.” Competition “I do not believe Thor can maintain its sales growth as competition in the RV industry heats up.” Miscellaneous N/A

17. General manager of a Colorado dealership

Like many of his fellow dealers, he is moving away from Thor and looking at other products and brands to sell. His dealership ended its relationship with Heartland (a Thor subsidiary) two months ago. New motorized RV sales remain stable, but used motorized sales are up in July compared with July 2012. But motorized RV sales over the past three months are down about 30% over last year. Towable RV sales are up about 10% in July and have skyrocketed 250% for the past three months, compared with the year-ago periods. His towable Thor sales are down 60% from the previous July, but that is because his dealership is reducing Thor inventory. He predicts the overall market to be soft this year. Despite his own dealership’s reductions in Thor inventory, he says Thor dominates the Colorado market and the company should continue to do very well.

Motorized Sales “New motorized RV sales are the same in July compared to July 2012. Used

motorized is up.” “Motorized RV sales over the past three months, compared to the same

three months last year, are down about 30%.” Towable Sales “Towable RV sales in July compared to July 2012 are up slightly (of course,

the month is only half over). They are up 10% for July.” “Towable RV sales are up substantially over the past three months—about

250%—from where we were last year.” “Towable Thor sales in July are down 60% from the previous July—of course,

inventory is getting low. In the past three months towable Thor sales are down about 35% for the same reason.”

“I think sales will be up for the remainder of the year but I have no hard projections because of our upcoming event. I think the overall market will be soft, though, just because of unstable markets.”

“Yes, Thor can maintain its sales growth. Thor has proven to be dominators in the RV industry. The stats will show that Thor dominates the Colorado market 3-to-1 over Forest River. If Thor can maintain the large dealer group, they will be successful and gain market share.”

Inventory “We have increased our inventory to support a national Fleetwood rally (FMA) that will start in two weeks. The new

motorized RV market seems to be soft thus far but the used later model motorized units seem to be gaining some traction. We are a bit heavy on used motorized, but that may be to our benefit if we see continued growth.”

“Our current towable RV inventory is heavy. We are no longer a Heartland dealer; we ended that relationship about two months ago. We are just selling off remaining product. So since we have been transitioning from Heartland to other brands, our inventory is heavy. It is also difficult to sell Heartland products since they seem to cater to Internet wholesalers.”

“Our current towable Thor inventory is getting light but hard to sell and we will not be re-ordering.”

Thor can maintain its sales growth. Thor has proven to be dominators in the RV industry. The stats will show that Thor dominates the Colorado market 3-to-1 over Forest River. If Thor can maintain the large dealer group, they will be successful and gain market share.

General Manager Colorado Dealership


http://www.fleetwoodrv.com/mhevent/

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“No, Thor is not shipping more than we are selling. When we were an active Heartland dealership, we had an isolated incident where a representative was shipping more than we were selling, but that was a rep issue. The overall rep support with Heartland was awesome and they were very respectful to our current inventory.”

“We are ordering from Thor less now—I think you are getting the point.” “Before we quit ordering from Thor, we would get special discounts on aged inventory sold. We had to re-order for

that to apply.” Open House/2014 “We will not see new models for another couple of months.” “We are not attending the Open House this year. We have attended the past two years in lieu of Louisville, but this

year we will go to Louisville in lieu of the Open House.” Competition “Forest River has always been a competitor to Thor products. Our biggest competitor would be another Heartland

dealer selling product for what we paid for it. It is easy to see the battle on who is on top when dealing with publically traded companies. Our biggest non-Heartland competitor was another Thor product—Keystone. As for Winnebago, I can only compare it with Fleetwood. I think Winnebago is a superior product. They have the most organized parts management and support system in the industry. I wish others would follow.”

“Overall, Thor dominates the market. The towable market in Colorado is dominated by Thor 3-to-1 over Forest River. Thor has really improved in quality manufacturing and we saw that with the Heartland products. We also saw great quality improvements with Keystone and Dutchmen by winning DSI [Dealer Satisfaction Index] awards. Dutchmen use to be known for poor quality trailers. I think with aggressive marketing strategies and a large dealer body, Thor does very well.”

Miscellaneous N/A

18. Sales manager at a newer RV dealership in the southwest U.S.

This dealership opened only five years ago, but is already one of the top five RV sellers in the state. Sales of Thor’s Keystone towable units have slowed as consumers favor the more current styling and competitive pricing of the Forest River brand towable units. The dealership features primarily Winnebago motorized units with some Tiffin and Forest River, but no Thor, and sales are mixed depending on the class with Class A gas unit sales up, but Class C sales are flat to slightly down compared to last year. Thor started 2013 by sending more units than were ordered, but the dealer started sending them back in May, after it was apparent consumers preferred other brands.

Motorized Sales “Motorized sales are flat to up, depending on the class. Class A gas units are up, but Class C is flat to slightly down.

Overall is probably flat to up slightly, similar trend over the last three months. Our first four months of the year are usually very brisk sales, and then things slow down a bit end of April through the summer.”

“We do not carry Thor motorized units new, but sometimes we have used units on our lots.” Towable Sales “Now towable sales are up 20% to last year [July and quarter], but Thor units are probably just flat. Forest River is up

58% for the whole year compared to last year. But they were better priced and better equipped for the price. During those promotional months, they [Forest River] offered great incentives to dealerships, some of which we passed on to the customers. But some of their incentives to dealers were for floor models, and some dealers love that incentive. Helps us get the stock we need on hand to make the sales.”

Inventory “Today our motorized inventory is a little heavy, not Thor. But it is just timing. We sold through all our motorized units

in April, and had nothing to sell, so we over-ordered a bit based on the strong sales, and those units just arrived on the lot [late June and July]. We did not sell anything before it arrived. But customers want to see what they are getting.”

“Now our towable inventory overall is right on track, but we have less Keystone [Thor] than we had last year at this time. They just were not selling as well as other brands [Forest River, etc.], so we adjusted our plan accordingly.”

“Yes, Thor was shipping out more than we ordered early this year. And we kept them in the beginning. But we stopped it in May. Their styling is a little stale and they are not as competitive on pricing, so those units were just


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sitting here. We can always send back anything we did not order. They do that so dealerships have more capital tied up in their [Thor] stock, and do not have as much to put competing brands on the floor.”

“Keystone [Thor] has been selling slower this year, so we are ordering less on slower consumer response to their units.”

“Personally, I think Thor has been at the top of the heap for some time, but maybe they got a little proud, and a little lazy, and now maybe the competition is hungrier, more responsive to consumer input. Winnebago is offering better options, better styling. Forest River is offering better pricing. Just my opinion.”

“For instance, the weather here is hot in the summer. These bigger units that only have one AC [unit], they are too hot. My customers need two AC units and 50 amp service in big units, every one of them. Forest River reacted faster to consumer demand and every large Forest River unit I get now has that feature. I cannot convince the Keystone guys to do that.”

Open House/2014 “We are a relatively new dealership. We have only been here five years, but in that time frame, we are in the top five

dealerships in this state. We will end the year up 20% to 25% over last year.” “I have not seen the 2014 models, but I can tell you Winnebago has new options. I think they are hungrier than Thor.

I am betting they will have the best new models, better styling and better options for the price than Thor. Thor was the top-selling Class A [motorized] last year, but my bet is on Winnebago this year. Winnebago is more expensive, but it is also better quality and people will pay more if they see the value.”

“Forest River as a less expensive motorhome, but it is impressive for the money too.” Competition “Forest River sales are up both for the quarter and July, and they are definitely most responsive to what our

consumer wants.” “Winnebago is expensive, but it is our top seller for motorized, up 100% over last year. Winnebago is a first-class

company and a better quality leader. People will pay a little more for better quality as long as they can see the value.”

Miscellaneous N/A

19. Owner and CEO of eight dealerships statewide

Source is the owner and CEO of eight dealerships statewide and carries 85% Thor branded products—only towable units, no motorized. He planned ahead, ordered early and more units from Thor, and it played out well for him. His sales are up to last year and his inventory is right on track.

Motorized Sales N/A Towable Sales “Last year was a good year, but we are still up 10% to 15% comparatively. My lot carries 85% Thor-branded units, so

that is pretty much reflective of Thor sales as well.” Inventory “We were seeing an increase in sales at the end of last year, so we anticipated strong sales and ordered in more

back in January. We ordered more and we ordered earlier this year [than last year] and we got it right this time. Our inventory is right on track, overall and of Thor units.”

“We are only getting what we order from Thor, and their deliveries are good. Each plant has a different level of complexity and different models come out of different plants, but deliveries are generally about three weeks to six weeks for the more complicated fifth-wheels.”

“Now it has been a very promotional environment in recent years, but not so much now. I am going to say it is less promotional this year than last year across the board. It just is not necessary now.”

“Thor finally gets it now, after me bugging them forever. They now understand and 90% of the big units I get from Thor come with two A/C units and 50 amp power. Nothing is more disappointing than to have a customer come back in after spending a lot of money for a nicely equipped motorhome, and finding out everything on their one A/C is working just fine, and it is still too hot.”

Open House/2014


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“It is too soon to know much about the 2014 models yet. Those shows start in September. I expect we’ll see some new knickknacks, some updated décor, maybe some new technology. But I have not heard of anything outstanding that will make a huge difference this year.”

Competition “Eighty-five percent of my inventory is Thor and they sell great. I do have some Forest River and some DRV [Luxury

Suites], it is a newer brand, and they are selling in line with Thor. I cannot see a lot of difference between the brands, other than just consumer taste and preference. It is not usually a name that moves them to one over the other.”

Miscellaneous N/A

20. Marketing manager of a Midwest RV dealership selling only towables

Dealership just added Thor towables to its inventory in December and it has been a good addition, selling comparably to other campers in the same class. Thor units are on hand and available, while other manufacturers are slow to deliver, and inventory of other brands is low while Thor inventory is on track. Sales are anticipated to outpace other brands through the end of the year as units sell through on the lot and more Thor units remain available.

Motorized Sales N/A Towable Sales “We did not carry Thor last July, we just added them in December, so I

cannot compare year to year. But I can say Thor is selling the same or slightly better than the competition in comparable class units. It has been a good new addition to our inventory.”

Inventory “Thor units are on our lot while other manufacturers are slow to deliver. We

are able to sell Thor because we have it available. We cannot sell anything the customer cannot see.”

“Demand is increasing and the other manufacturers have hesitated in increase production, while Thor has not.”

“The industry is promotional, and everyone offers a deal of some kind, but Thor is not doing any more or less than anyone else.”

Open House/2014 “As we sell through the units we have on hand, we will have more Thor units than anything else. Then sales of Thor

will outpace anything else and I expect they will end the year ahead of the other brands.” “I have not seen any of next year’s models yet. They will begin to arrive over the next month or two, but we start

promoting all the 2013 models around October in hopes that we will sell through them before January.” “We do our big RV show with all the new models in January. That is when we really start to push sales on those

models.” Competition “Forest River models we carry are really more high end than the Thor models we carry, which are pretty basic, so it is

not really the same shopper. Honestly, most of our shoppers are looking at the higher-end models, so we probably sell more Forest River than Thor, but it is not a fair comparison.”

“Thor is selling as well or better than any comparable unit on my lot, and I can tell you now, we have enough Thor to meet demand, and when everything else is sold Thor sales will outpace the other brands.”

Miscellaneous N/A

21. General manager and president of a family-owned dealership in Missouri

Thor can maintain its growth despite competition in this industry, since the company has strong financials. This dealer’s towable sales are up slightly in July year over year, and his towable RV inventory is down due to a busy spring and

Thor is selling as well or better than any comparable unit on my lot, and I can tell you now, we have enough Thor to meet demand, and when everything else is sold Thor sales will outpace the other brands.

Marketing Manager Midwest RV Dealership


http://www.drvsuites.com/

http://www.drvsuites.com/

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summer. His dealership has many units on order, and plans to stock up following the Open House show in September. He says Forest River is also a leader in the industry, as the company works hard to stay ahead.

Motorized Sales N/A Towable Sales “Towable RV sales in July are somewhat up over last year, approximately 5%.” “Towable Thor sales in July are steady, and up some over last year.” Inventory “Our current towable RV inventory is somewhat down, due to a busy spring and summer. We have many units on

order. Our current Airstream inventory is the same.” “No, Thor is not shipping more than we are selling.” “No, we have not changed our ordering from Thor in any way.” “No, Thor is not offering special discounts, promotions or cheap financing.” Open House/2014 “We are looking forward to stocking up, and hope for something new and exciting at the Open House.” Competition “Forest River is a leader in the industry. They work to stay ahead—not in every division, but most.” “Yes, Thor can maintain its growth as competition in the RV industry heats up. They have very strong financials.” Miscellaneous N/A

2) MANUFACTURERS Our first source sees motorized sales up single digits for July and the past three months year over year. Our second source sees sales up 29% for January through May and our third source sees their sales up from 29% to 45% depending on product. Towable sales increased, but to a lesser extent. Our first source sees sales up in the low double digits for July and for the past three months year over year. Our second source sees sales up 12% for January through April. Our third source sees sales up double digits year over year. Inventory is in line to slightly short of demand for all three sources. One source’s expectations of Open House and 2014 sales are high, while two had no comment. One source expects increasing pressure on margins. Two sources say the attraction of a wider demographic will boost growth. KEY SILO FINDINGS Motorized Sales

- 1 manufacturer sees sales up single digits for July year over year and for the past 3 months. - 1 sees sales up 29% year over year for January through May. - 1 source said Thor’s sales for motorized brands were up 20.7%. Theirs were up 28.8% to 44.8%, depending on

product. Towable Sales

- 1 sees sales up low double digits for July year over year and for the past 3 months. - 1 sees sales up 12.2% for January through April year over year and up 13.8% for April year over year. - 1 sees sales ‘blown away’ year over year with sales up double digits.

Inventory - All 3 said inventory is in line to slightly short of demand. - 2 sources report Type A inventory as low.

Open House/2014 - 1 has high expectations. - 2 had no comment.

Competition - Though the industry has gone through a lot of consolidation, there is still a lot of competition.


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- 1 source expects increasing pressure on margins and doesn’t see how Thor can continue its growth rates as growth due to acquisitions will subside.

Future Expectations - All sources are optimistic about growth expectations. - 1 expects 2013 to see sales growth of 7% year over year and growth of 4% to 5% in 2014. - 2 see favorable demographics playing a supporting role in industry growth.

1. President and CEO of a major RV manufacturing company

Motorized RV sales are up this year and year to date in the single digits, and towable sales mirror last year’s numbers. His company is on track with its inventory for the type C motorized vehicles but currently has a low inventory for type A motor homes, as that market is incredibly strong right now. His dealership is expanding production of type A recreational vehicles. He does not believe Thor is shipping more than dealerships are selling, and he says dealerships have not changed their ordering patterns from Thor. His company expects to see a 7% growth rate this year and between 4% to 5% growth in 2014. He also expects Thor’s growth to flat-line since much of its past growth came through acquisitions. There is little new with next year’s models, except some attractive cosmetic changes.

Motorized Sales “Motorized RV sales are up this July compared to last July, and up over the

last three months compared to the same three months in 2012, in single digits.”

Towable Sales “For towable sales July over July and over the last three months, compared

to the same three months in 2012, we are up probably in the low double digits.”

Inventory “With our type C motorized vehicles we feel we are on track with inventory.

Type Cs are build on a Ford chassis, with a bed over the top of the cab and the window up front. With our type As, our inventory is low, both at the dealer level and here at our factories. We are selling more type As—that market is strong for right now. We are going through an expansion of that operation right now as we speak.”

“We have 300 dealers and our towable RV inventory is right where it needs to be for this time of year. If I was a betting man, Thor would say the same thing.”

“I do not think Thor is shipping more than dealerships are selling—not right now.” “Dealers have sold down their inventories.” “Dealerships have not changed their ordering from Thor. Things remain the same.” “All of the major RV manufacturers in the industry are offering incentives in terms of discounts and also financing

options.” Open House/2014 “We are expecting to see the year pacing 7% ahead of last year.” “We are expecting next year to be another growth year for the industry, somewhere between 4% and 5% in

shipments, and that is the same as we expect for retail.” “I do not see a lot of changes coming to the products other than what I consider traditional new year items, such as

interiors and a little bit of exterior changes and looks.” “I really believe the next 10 to 15 years will be right for the industry. The demographics are certainly in our favor.” Competition “Competition is the same for all of us. There is an increase in pressure on the margins. It is a very competitive

industry.” “I would not expect Thor to see the growth they have had for the last five years. Their growth may flat-line as

competition increases. There is actually less competition now than in 2006 and 2007. A lot of Thor’s growth came from acquisitions, and I am not sure how many more acquisitions are out there.”

Competition is the same for all of us. There is an increase in pressure on the margins. It is a very competitive industry.

President & CEO Major RV Manufacturing Company


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2. Investor relations manager for a major RV manufacturer

Motorized sales have skyrocketed by 29% for the first five months of the year for this major RV manufacturer, and towable sales are up 12.2% for the first months of the year, compared with the same time period in 2012. This explosive growth can be attributed in large part to a better economy and a more positive feeling among consumers, who are eager again to spend money. There is a backlog in some inventory, partly due to the scarcity of the Ford Class A chassis. Discounts and promotions remain unnecessary, partly because the market is growing at such a rapid clip. The industry continues to be competitive and should remain a growth industry for the remainder of the year.

Motorized Sales “For the first five months of this year, we are up 29% in motorized sales compared to the same period last year.

There are a lot of factors for this—primarily, the economy is stronger and the feeling of wealth is dramatically improved. The housing market is improving. People feel better about extra money. … It is just a much stronger economy right now.”

“For the month of May, we are up 28% in motorized sales from May 2012.” “We have had strong growth this spring overall and do not see that that will be hampered. The signs in the economy

are positive.” Towable Sales “In April, year-to-date our towable sales were up 12.2% from the prior year, and were up 13.8% for the month of April

alone compared to April of the year before.” Inventory “We have a huge backlog, so our inventory is very reasonable for what we have going on in the market right now. We

have a large backlog partly driven by the fact that Ford class A chassis’ are very scarce right now. This is an industry-wide issue, not just our company. We have also seen a lot of entrants in the motorized market.”

“I am sure our current motorized RV inventory is very similar to Thor’s.” “Our current towable inventory is reasonable. Certainly Thor has a large presence in the towable sector.” “We are in a growing market so we do not have a need to offer discounts, promotions and cheap financing in order

to move inventory. I do not believe Thor is doing so.” Open House/2014 N/A Competition “It is a very competitive industry. It has always been a very competitive marketplace. We believe in creating exciting

new products in this marketplace to drive demand.”

3. General manager of a major RV manufacturer

Motorized and towable sales are seeing double-digit growth in a big way, and this industry is on an uphill ride with no end in sight in the foreseeable future. Some of this company’s products have seen growth of over 44% this year. Overall, the industry is short on inventory, particularly in the motorized arena, though towable inventory is in balance with demand. All eyes now look to September, when the Open House season begins and dealers flock to buy new products. He expects a very healthy result from the event and believes this industry is poised for continued growth. Thor is at the head of the pack in some categories and will continue to prosper, partly because it has a good solid, financial position and smart people running the company.

Motorized Sales “Our motorized RV July sales were definitely well in excess of last year.” “Over the last three months compared to the same three months of 2012, we saw higher volume.” “Sales of our motorized brands in July are going to be higher than last July. On retail registrations year to date,

motorhomes are up 29% on the retail side industry-wide. Thor’s sales for motorized brands were up 20.7%. Ours are up 44.8% on some of our products, and 28.8% on others.”

Towable Sales “Towable sales are blown way. They are up significantly, in the double digits.” Inventory


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“Our inventory is in balance and if anything a little shy. Motorized inventories are not too heavy. This year they are in synch. But the industry is actually short on inventory overall.”

“When you take total motorhomes and retail registrations through the first five months of the year, Thor had 3,062 registered, Forest River had 2,980, and Winnebago and 2,158. For class As, Thor is No. 1, Winnebago No. 2 and Forest River No. 3. For class Cs, Forest River is No. 1, Thor No. 2 and Winnebago No. 3.”

“Our current towable inventory is in great balance. Thor is the same. In both the last two years we have had lead time issues where the industry was capable of absorbing more inventory.”

“Dealers do taper their inventory back and they run low. Dealers taper back purchases until the third week of September, when the expo occurs, and then they order product in that time frame.”

“I do not see that Thor is shipping more than dealerships are selling. They operate differently than we do. They build open inventory at their facilities and we build to order.”

“My prediction is that by the end of the year you will see wholesale and retail numbers be as close to or in synch as they will ever get, as long as there are no storms or extraordinary events that impact things. That has been the case for the past two years.”

Open House/2014 “Everybody will unveil stuff in September. It has turned into the timeline when the new stuff gets purchased and

seen. Everything is extremely positive and next year will be another growth year—probably not as high as this year, but it will be two steps forward rather than one step back. And frankly my outlook for the next eight to 10 years looks very good.”

“My expectations for the Open House season are high. We will probably sell a half a billion dollars worth of products in three days.”

“For our industry it is the perfect storm. You have had a much better economic climate than what the media would lead you to believe. Demographics certainly played to our favor and we have done a good job of branding the lifestyle, branding our products, and with Internet marketing. It is not solely the demographics of an aging retirement community—it is like harvesting and replanting trees. It is kind of a product you think of as being cool. You look at kids’ sports and all the traveling, with kids and grandkids. What a convenient way to go. Our industry has focused efforts to get more and more Hispanic families involved. There is an African American camping club. There are not too many downsides.”

“The consolidation that is out there will continue. So it is a business that 10 years ago was twice as fragmented as it is today, so we had some rogue pricing, and had to go through the half-court-shot-at-the-buzzer mentality, where people were struggling to stay alive. Basically, we have healthy companies that know what they are doing, and finance companies have not gone back to stupid. Our industry is a small piece of the overall economy but if we can maintain good solid credit practices as a country and prevent that next bubble, then growth is real and sustainable. I think Thor will continue to perform just fine ...”

Competition “Since the credit bubble burst, our industry has gone through an incredible amount of consolidation and there are a

couple more targets for consolidation, guys that will not make it or have a reason to sell.” “I would like to think we will take market share from Thor every day. It is friendly competition, but make no mistake it

is definitely competition.” “Industry competition pushes you to continually be better. We have gone through consolidation in the industry since

2009. The motorized side is not very fragmented.” Thor’s performance “If you take a look at Thor’s financials, you will see they perform well financially all the time. They sell into that open

inventory and each month they offer discounting and perceived discounting. The reality is when you take a look at the financials they produce, they make a good return for the industry.”

“Thor will do just fine in terms of sales growth—they have got a solid financial position. They have solid guys running their companies.”

3) SUPPLY CHAIN Our first source expects 5% to 6% sales growth of aftermarket parts for his southwest region year over year. One source reports supplier inventory is increasingly being sourced from overseas. Thor may stand to improve margins if it utilizes its free-


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trade zone in Elkhart, Ind., to initiate direct outsourcing of its supply parts. A widening age demographic will help continued sales growth. KEY SILO FINDINGS Motorized/Towable Sales

- 1 source expects 7% to 8% sales growth year over year for Texas and 5% to 6% for the region. - high-dollar accessory sales declining an estimated 20% because manufacturers are including more of these in

vehicles. Inventory

- Imported parts have risen to about 70%, up from 10% 10 years ago. - Thor could do better in terms of margins in 2013 and beyond if it would utilize its Elkhart, Ind., property, located in a

free-trade zone, to initiate direct outsourcing of its supply parts. Open House/2014

- 2014 sales expected to be strong fueled by access to credit; prices are more reasonable due to outsourcing of parts. - Young families and baby boomers are fueling growth.

Competition - 1 source believes Thor and other manufacturers could improve profits via direct manufacturers rather than using

suppliers who source from overseas.

1. Director of business development for import company of RV supplier parts, Midwest

Thor’s empty warehouse and buildings in Elkhart County, Ind., are the company’s “ace in the hole.” That is, its profits and sales may be in a good position now, but this source believes it could do better in 2013 and beyond if it would utilize the property, located in a free-trade zone, to initiate direct outsourcing of its supply parts—a growing industry trend. By running its own direct outsourcing operations, this source says, Thor would cut out the estimated 20% or so markup it’s now willingly paying third-party U.S.-based distributors. Reversing this business model would effectively improve its profit, as well as make its final RV sales prices more attractive to consumers since it won’t have to pass along the markups. Even if Thor used a U.S.-based supplier and still pays a 5% markup on parts, the source estimates it would still manage to net 15% it would otherwise have paid the distributors. Other potential supply chain challenges for Thor and other RV competitors in 2014: a 22.63% duty on Chinese plywood the U.S. will enforce in October 2013, and a potential price shift to secure premium ocean-liner container space.

Motorized/Towable Sales N/A Inventory “There are three main RV folks here in the … area—three free-trade zones

established. One of them is a third-party wholesaler. The second is Audiovox (now called ASA Electronics)... The third is Thor, but interestingly, they have not done anything with their free-trade zone in Elkhart. I’d love to know why. That indicates to me that they thought through direct sourcing overseas and they haven’t pulled the trigger yet.”

“This means that Thor is buying parcels from somebody in the U.S.—parts that are still being manufactured overseas, but buying them from these third-party distributors in the U.S … that add a markup to that product … for freight. …If Thor is OK paying a 20% markup [for instance], that means their sales numbers are high enough and they are making enough of a profit on RV to be willing to do that.”

“Over the last five or eight years, we’ve had 70% of an RV that is built on imported parts. Ten years ago, they would have had a total of 10% parts imported. There were only five [companies] importing 10 years ago, and now there are 200. It just makes good business sense for Thor to use their warehouses to outsource directly.”

This means that Thor is buying parcels from somebody in the U.S.—parts that are still being manufactured overseas, but buying them from these third-party distributors in the U.S … that add a markup to that product … for freight. …If Thor is OK paying a 20% markup [for instance], that means their sales numbers are high enough and they are making enough of a profit on RV to be willing to do that.

Director of Business Development Midwest RV Parts Supplier


http://finance.yahoo.com/news/preliminary-antidumping-duty-rate-announced-235100259.html

http://www.asaelectronics.com/

RV Industry

“The supply chain hasn’t matured yet, and Thor hasn’t taken enough advantage of their free-trade zone. … Thor may be scared because they don’t have someone who knows how do it [directly outsource from its currently empty Elkhart County warehouse]. Quality assurance can shut down a line if not done right. They also probably don’t want to keep up the inventory to do it. You have to keep a high inventory [to satisfy purchasing agents and quick turnaround times].”

“The total quantity of volume of containers … which are marketed to RV ... is growing tremendously. It’s a big opportunity for me in my job. I couldn’t tell you the exact volume between 2010 and 2013, but I know it has tripled from 2005 and 2006. We haven’t hit the peak [for the RV industry].”

“The volume of cargo [parts containers] has gone through the roof on the third-party supplier end [in the past few years]. [For example], suppliers are importing supply parts, from the wood to … what we import, which is some of the fiber glass outside coating from Germany. … We also do wood, wheels, electric lights, everything.”

Open House/2014 “2014 is still going to be positive. Thor has that ace [an unused free-trade zone warehouse] in the hole. I want to

introduce that ace to them: they have all these empty buildings and a lot of warehouse space that could help them save these 20% parts’ markups from third-party distributors. It may still cost them 5%, but then they’ve netted 15%. There has to be someone there who is seeing these numbers that they’re paying out to distributors that they can make into their own profit.”

“There are two points as to why RV sales are back up: It’s easier to borrow money again to buy the RVs and … the sales prices to the consumers are cheaper because [manufacturers are using supplies that are] outsourced overseas.”

“I do see a couple of specific [potential hurdles for Thor and parts suppliers]. There is so much capacity in the ocean vessels coming from Asia to the U.S. that the rates are all over the place right now. … If the transatlantic eastbound traffic stays competitive and the prices stay low for the containers shipped from Asia and stay low all the way to the door of the customer, then sales will stay level. [Current] capacity of ocean liners from Asia to the U.S. can carry up to 18,000 containers. However, if the capacity gets fixed … through mergers or bankruptcies and there is not excess capacity from Asia than that will translate into higher prices.”

“Wal-Mart brings in more on ocean liners from Asia than any other [U.S.] company. Wal-Mart has committed to spending $50 billion more on domestic than outsourcing to overseas. That means there is likely going to be more room on the vessels [for internationally outsourced RV parts suppliers]. If that changes, though, then third-party parts distributors will have to pay a premium on those vessels to get their parts in and that will be a negative for manufacturers, including Thor, because the prices get passed along. Rising fuel costs can add to that.”

“One [price challenge] that happened this last year is regarding Chinese plywood. There was an anti-dumping [unfair pricing] suit filed that came through, so now Chinese plywood carries a 22% duty. A lot of cabinet manufacturers buy Chinese plywood to make their cabinets [in RVs]. We don’t have enough material here in the U.S. … This 22% tariff tax will be finalized in October. It’s a small piece, but if anything like that also happens on tires or wheels, for example, tacking duties would drastically change the supply chain or final RV sales prices.”

Competition “The market is doing well with RVs, but I don’t think [Thor and its competitors] are selling the volume they could be.

Their profits are really high … but a [lower RV sale] cost can be cheaper if they do direct [outsource] manufacturing.” “Thor should consider direct outsourcing or find a U.S. manufacturer with better or similar prices to compete. It just

makes a better RV [industry] and, ultimately, makes a cheaper price for the consumers who buy the RV because they no longer are passed along from Thor’s third-party markups.”

“None of the RVs direct manufacturers are manufacturing overseas, but all of the suppliers are, so it is a complicated process [that affects overall RV sales prices] because none of the main RV manufacturers source their own goods directly from overseas. They all use big distributors who import parts from overseas [and that translates into price markups].”

2. Regional sales manager for aftermarket parts distributor, central and mountain states

This aftermarket distributor’s large ticket supplier parts, such as satellites, electronics and refrigerators, dropped roughly 20% within the past year while service parts grew 6% in the central and mountain region. He attributes the big-ticket losses to a shift in OEM building standards to increasingly include such items on new RVs. Services parts, such as repair


http://www.prnewswire.com/news-releases/american-alliance-for-hardwood-plywood-federal-government-duty-announcement-finds-no-dumping-but-applies-duties-to-chinese-imported-hardwood-plywood-market-anyway-205462681.html

RV Industry

parts, compressors, AC adaptors, and a host of this company’s 30,000-plus parts, are up because consignment RV sales are a hot trend as consumers trade in for newer models. That said, service parts sales are cranking at an 8% increase in Texas where workers tending to the area’s oil and natural gas booms are putting some hard living in RV trailers for weeks and even months on end.

Motorized/Towable Sales “In the Texas area, we are looking at an overall [sales] growth of 7% to 8% [YTD], and for the region: 5% to 6%.” “Our high-dollar accessory sales have declined because OEM. Many OEM building standards already include the

satellites, refrigerators, air-conditioning units—they are coming already built in the RV units. However, our service parts are seeing explosive gains, primarily because consignment [RV] sales are huge right now. If you have a quality unit you want to put out there, they are not staying on the dealers’ lots very long.”

“High dollar items dipped off maybe 20% [2013 to 2012]. I’m estimating here because I don’t have my reports right in front of me.”

“Our sales are lagging [for] satellites, electronics, and similar big-dollar items, but that varies from dealer to dealer that we contend with.”

“[Service part increases:] Honestly, I do 35,000 parts, but to give you an idea what’s up: circuit boards, repair parts, compressors. It’s really all over the spectrum.”

“We are seeing some great sales numbers out of Texas as the dealers make units light, towable trailers, which started a couple of years ago. … We are seeing some of the same thing out of North Dakota.”

“In west and south Texas, especially, we are experiencing high oil and natural gas booms. It’s just off the charts. A lot of the service people in these areas are out there working four to six weeks at a time and living in [RV] trailers. When you are living out in these trailers, you put a lot of hard living into them and people are buying [replacement parts]. “

“We also saw a little dip on fifth-wheel hitches …” Inventory “We aren’t really seeing any outsourcing [of supplier parts] in my areas right now.” Open House/2014 “As quickly as the manufacturers get these new units out, there are many people trading out. One dealer I know in

Montana will get a consignment and sell it the same day.” “In the Texas area, there are more younger families coming into the RV industry. We have seen a tiny spike in truck

camper sales and with lightweight entry-level trailers. Baby Boomers, of course, are going to be a major part of [parts and unit sales].”

Competition N/A

4) INDUSTRY SPECIALISTS Wholesale motorized sales have increased 30% for May year to date, according to two sources. Wholesale towable sales are up 11% through May, according to one source. RV retail sales increased 16% for motorized and 9.5% for towables from May 2012 through April 2013, according to another source. One source expects towable sales to make up 89% of all sales in 2014. Inventory is in line with demand. Growth for 2014 is expected to be around 4%, according to two sources. One source reports 2013 year-to-date industry growth to be 11%, outpacing the expected full-year figure of 8% growth. One source sees Thor outpacing the competition in motorized homes but falling slightly behind for towable sales. One source sees Thor as only ‘a step and a half’ ahead of competitor Forest River. KEY SILO FINDINGS Motorized Sales

- YTD shipments through May were up 14% year over year, according to 1 source. - Wholesale sales have increased around 30% year over year for May YTD, according to 2 sources. - 1 source reports the top 4 motorized retail sellers were: Thor, up 31.8%; Winnebago, up 21%; Forest River, up 23%;

and Coachmen up 17.4%. - 1 source believes a larger issue than sales is finding skilled workers for the industry.


RV Industry

Towable Sales - 1 reports wholesale sales up 1% through May year over year. - 1 reports towable sales are expected to comprise 89% of wholesale sales are for trailers vs. 11% for motorized in

2014. That is similar to the market mix for the past 3 years. - 1 reports Thor comprising 9.6% of towable retail sales, Forest River 11.4%, Jayco 3.2%, and Coachmen 15.4%.

Inventory - 3 of 4 dealers are reporting inventory in line with demand according to 1 source. - 1 says Thor is not stuffing the channel. - Inventory is in line to slightly short of demand, according to all 4 sources.

Open House/2014 - Positive outlook based on improving economy and consumer wealth. - 2 say wholesale shipment growth for 2014 is expected to be around 4%. - Growth YTD of wholesale shipments is up 11%. 2013 projected growth is expected to be 8%, a figure one source

sees as foreseeable to beat. Competition

- Thor is outperforming the motorized industry by 4% for motorized homes, with 34% growth, but slightly underperforming for towables, with 5% growth.

- Retail spikes Thor sees are likely from rentals, but should come back in line with general market trends throughout the year.

- Thor is only “a step and a half” ahead of Forest River in terms of product sales, as well as general market and sales growth potential, according to 1 source.

1. President of RV dealers trade association

Thor is likely to benefit from the “slow, steady growth” of the RV industry, of which total unit shipments for 2014 are projected to grow by 4% over 2013. Thor is slightly underperforming in towables and overperforming in motorized from April 2012 to April 2013 when compared to the rest of the industry, including primary competitors, Winnebago and Forest River. However, the source notes Thor is doing very well based on its current profit margins and EBT growth. Further, the source says Thor is “absolutely not” stuffing inventory channels, as 3 out of 4 dealers surveyed by this trade association indicated overall unit inventory is “just right.” In addition to an increase in retail demand, this inventory also is considered healthy now that floor-plan lenders are more aggressively charging curtailments on aged inventory. An estimated 90% of domestic dealers use floor-plan lending, and therefore have more incentive to stock newer RV inventory.

Motorized Sales “Our latest numbers [of motorized sales] are through May; there is a little bit of a lag time in reporting. Wholesale

shipments from manufacturers to dealers this May over May 2012, for total [aggregated/accumulated] RV shipments, are up 13%, or 127,454 total number of units. The total number of units for 2013 is 144,015. Again, that’s a total percentage change of almost 14% from May 2012 to May 2013.”

“The motor home business is up to a high of 30.4%. The unit numbers there are 12,250 for 2012, and for 2013, it is 15,978.”

“The [motorized RV sales] for May were up 30.7% over May 2012. Those numbers have been fairly consistent over the first five months of the year; being up just under a third, or up 30%.”

“A few things have spurred the motor home sales trend. Motor home owners are more focused on how their investments are doing and with the stock market doing well lately … that has helped the more affluent feel they have a more discretionary cushion so they can buy a motor home. Also, there was some increased demand for motor homes from people who upgraded from pre-2005 motor homes.”

“Motor home buyers have been on the sidelines for a while. It used to be that motor homes were about 25% of RVs sold. Now it’s about 10%. Starting in 2005, motor home sales started to recede, and while our numbers were growing, it was the more lower-cost towable sector that has grown [significantly]. The towable sector is about 90% of the [total aggregate] unit volumes.”

Towable Sales




RV Industry

“Through May in 2012, the number of towable RV sales was 115,204 units accumulated. In May 2013, it was 128,037 and that’s up 11.1%. The percentage increase is not as much as the motor home increase [comparatively].”

“For Thor’s number, I only have what they report on the public statement. … Also, the retail market share info lags even more behind the wholesale shipment numbers. We won’t have May retail until later this month. We are, however, reporting up to April, and that shows travel, trailer and fifth-wheel [towable] retail is up 9% based on their most recent Q3 filing. … When you get into retail there some more granularity that we don’t have the numbers for [i.e. towable Thor sales over the last three months].”

Inventory “About three quarters of our member dealers say the inventory is just right; 20% said they are too heavy and 5% are

too little. So every three of four dealers say just right and that’s indicative that the inventory is pretty fresh and healthy.”

“Absolutely not [Thor stuffing the channel].” “There is not a lot of aged inventory, and that’s due to a couple of reasons. The retail demand is there. That’s

number one. Number 2: the floor-planning lending situation has changed, Ninety percent of dealers use floor-plan lending and floor-plan lending has tightened up in terms of the inventory on a lot. Dealers have to make payments to inventory financing companies if they have this older stuff on the lot. Basically, lending practices have encouraged dealers to turn their inventory.”

“Before the economic downturn, inventory didn’t sell, but inventory lenders would not be as diligent about charging curtailments, but now that’s a different situation for the dealers.”

“Retail has kept up and there has been more inventory, but it’s seen by most people—by both people looking from the outside in and by people within this industry—to be healthy. RVs are a discretionary purchase like buying a boat … and if you don’t have it [on the lot] than those people will go somewhere else, so a lot of time dealers feel like they have to have it on the ground.”

Open House/2014 “The University of Michigan [Survey] Research Center does some projections

for the manufacturers association. The crystal ball is always a little foggy, but they’re projecting in 2013, according to their release in June, that total shipments will be 309, 800 (all RVs). They expect that would be an 8.45% increase over 2012. We are doing better than that for the time being. For 2014, they are predicting shipments at 321,800, which would be a 3.9%, or 4%, gain over this year.”

“It’s a slow, steady growth, and we are nearing the pre-recession numbers that we had. Those were between 300,000 and 400,000 in 2007.”

“Part of the pent-up demand for the new unit is there are a lot more slide out rooms in motorized and towables that make the units bigger, and also the advent of flat-screen technology, which is ideal because the items are lighter and take up less space in the RVs. All these upgrades are very, very attractive to current owners. There are a lot of reasons to upgrade.”

“The biggest thing for us is consumer sentiment. As the job sector improves and housing stabilizes, especially for high-end stuff, and Wall Street’s investments are doing well, then that is, without question, goof for our industry and everyone else in the discretionary market.”

“There’s no reason to think [Open House season in September] won’t be another successful event. It’s all based on retail demand. As long as those retail numbers continue to keep pace with the wholesale shipments, we are in good shape.”

Competition “Based on this last [Q3] report, Thor is up 5% in unit volume in towables, and they were up 34% in unit volume in

motorized. They are outperforming the motorized industry—they are about 4% higher than the industry on motorized homes—but are slightly underperforming in towables. But their profit margins are higher over Q3 2012 from what they reported, and their growth profit is higher and their EBT is higher, so they are doing very, very well.”

“The thing about Winnebago is even though they are a well-known company there’s not as much investor attention … because their market cap is so small. Thor is the only company beside Berkshire-Hathaway that investors can get into.”

About three quarters of our member dealers say the inventory is just right; 20% said they are too heavy and 5% are too little. So every three of four dealers say just right and that’s indicative that the inventory is pretty fresh and healthy.

President, RV Dealers Trade Assn.


http://www.sba.gov/content/what-floor-plan-financing

http://www.sba.gov/content/what-floor-plan-financing

RV Industry

“Forest River doesn’t get granular in its reporting. … but when Wall Street looks at Berkshire-Hathaway’s year-end market share, it’s been pretty consistent [with the rest of the industry’s increases].”

“Winnebago is a different breed of cat because they are not as diversified as Thor as far as their unit volume. They do have a total division, but it is very small. The bulk of their unit volume Is motorized. Again, this is just through April, Winnebago grew 13% in April so they are up 8% through the first two months of the company’s fiscal Q3. Winnebago’s total growth for the quarter was up 20% [versus same time 2012]. Winnebago released its Q3 result on June 27. They’re doing it by revenues. The revenues for Q3 ending June 1 was $218 million, an increase of 40.1% from 2013 over 2012, so they are having a very good quarter. … They don’t really get into their unit volumes in this last report.”

2. Media Relations Director of RV industry trade association

Initial analyst projections anticipated the industry would grow by 8.4% overall in 2013, but the total units shipped from January to May is currently ahead at 11%, compared with 2012. This indicates to the source that shipments could dip to about 6% for the remainder of 2013 if the industry keeps pace with the original 8.4% projection. However, the source notes that sales are impressive, especially in light of this industry association’s need to cut its RV advocacy advertising to $4 million from $16 million within the last several years. That said, overall RV sales are steadily growing alongside the improving economy with an anticipated 321,000 units to be shipped, or a 4% year-year growth in 2014. Towables are expected to drop slightly in 2014 from 90% to 89% of the overall market share, but with more manufacturers building them to minivan and crossover SUV specifications. The source further noted inventory levels spiked in 2010 because dealers restocked lots following the reversal of the recession’s severe credit crunch that temporarily thwarted the ability for dealers to secure floor-plan lending and, for consumers, the loans needed to purchase RVs.

Motorized Sales “The last stats we have are from May. Motorized sales are up 30.7%, just looking at the month of May compared to

last year. In May 2012, [manufacturers] shipped 2,829 and this year it was 3,689.” “The total motorized units shipped was up 30.4% for 2012 to 2013, through the end of May. That is, from 12,250 in

2012, and then in 2013, it’s 15,978.” “From March through May of 2012, we shipped 8,156 motorized units and, in 2013 for the same three months, it’s

10,563. That’s up 29.5% [despite a late start to spring in 2013].” Towable Sales “Towables in May are up 9.9%. In 2012 the industry shipped 26,250 and then in 2013 shipped 28,841. This is just

May.” “Towables have been 90% ship and sales for the last six or seven years. … It’s been like that for several years.” “For the year [to date], towable are up 11.1% from January to May. In 2012, during that time, we shipped 115,204

and in 2013 it’s 128,037.” “The market share has always been more for trailers than for motor homes. My spreadsheet goes back to 1981 and

it [annual shipment] was 74% trailers, versus 26% motor homes. The highest motor home share was 38% in 1984. In more recent history, trailer share went to 80% in 2000, and it’s been over 80% every year since then. … Then in 2006, it went to 86%, and then in 2008 to 88%, and then it peaked to over 92% in 2009. In the last three years, it’s been consistently about 90% and next year [2014] we are projecting 89% share. The motorized share is the percentage difference.”

“Towables are attractive because buying the engine [for a motor home] is an additional expense. Towables are a lower cost, and if you already have a pickup truck or other vehicle that can travel with a fifth wheel or trailer, then all you really need to do is add a hitch and maybe upgrade to a transmission. That’s about $300, versus an extra expense of $40,000 to $50,000.”

“It used to be that the motorized home was luxurious and trailers were more utilitarian, and now that line is getting more

Inventory “After the previous recession, the inventory growth was a bit more steep and sales went up more sharply. That hasn’t

been the case this time. We had a big jump in inventory in 2010, but that was more of dealers restocking after the credit crunch, and the sales growth has been steadier.”

“I have not heard anything specifically about ordering habits changing since [that big restock in 2010].”


RV Industry

“I haven’t heard much feedback from the manufacturers’ side about inventory. However, I have spoken with dealers. There was one dealer in Virginia and his biggest issue was not being able to get enough of a certain product (Tiffin Motorhomes, especially). His goal for last year was to sell 20 to 25, and he sold more than that. He could have sold double that, he said, if he had the inventory.”

“The primary concern I’ve heard from manufacturers I have spoken with is just a little bit of talk about budgeting. Some of the raw materials, in some cases, they could not get because the demand on suppliers exceeded what the suppliers anticipated. However, that is not as much of an overall issue because there are now many manufacturers (at least the larger ones) who have orders going out for months ahead. They prefer building to order than, for example, building 10,000 units in one month with just a hope they’ll sell.”

Open House/2014 “For 2014, we are projecting 4% growth; 321,000 units shipped in 2014.” “Last year, the projection was that we would be a little slower in the first quarter of this year, and picking up as the

year went on, but the first quarter through May has been stronger than anticipated. The projection is now 309,800 total units shipped. There are some that thought we’d have 8.4% growth over last year. The current [shipment] rate suggests the growth of shipments will slow down a little in the second half of the year.”

“In other words, we are already up 11% and if we do only meet the 8% projected growth rate then shipments would have to be down at about 6% the rest of the year. “

“With the way the economy is recovering and the other factors (jobs, credit, housing, stick market, etc.) that are feeding the industry’s growth right now, we can very well exceed that projected 8% growth. … I don’t recall the margin of error, but the projection was initially to optimistic going into the downturn and now it’s not quite optimistic as we come out of the downturn.”

“In a way, technology is working its way into virtually all [new model] products across the RV industry. People are trying to make RVs simpler to use. in that push a single button sense … Another big trend in products is taking the weight out so they can be easily towed. There are manufacturers building specifically with minivans and SUV cross overs in mind. This is an industry-wide emphasis on more aerodynamics and fuel efficiency, especially on the motor home side. “

“We’re seeing trailers and motor homes getting smaller too. Slide-outs and electronics are shrinking so the designers are able to create as much living space, but with a smaller footprint. An example of this is the television. Years ago you’d have to build a cabinet in the unit to hold the televisions, and if you wanted more living space you had to build out around that. Now, with flat-screen TVs, you can just have it hang on the wall and eliminate the cabinetry.”

“Open House is something members like to do. I don’t know we have a whole lot of expectations for that. … Most of the new product rollouts come out at Louisville [51st National RV Trade Show to be held Dec. 3-5] than at the Open House. [Elkhart] Open House is a lot more of people trying to make deals on existing products.”

“The big thing boosting sales is consumer confidence is up and credit markets are making it possible. It’s also the change of all the variety of economic factors that drove down the industry: housing, jobs, the stock market, et cetera.”

Competition N/A

3. President of data aggregate company specializing in RV statistics

RV retail registrations are up this year 16% for motorized and 9.5% for towables over 2012. For the same time frame, the companies with the most retailed motorized were Thor, up 31.8%, and Forest River, up 23%. Likewise, towables were Coachmen, up 15.4%, and Forest River, up 11.4%, which are both outfits of Berkshire-Hathaway Inc., yet report separately. While Thor’s motorized sales exploded in the first four months of 2013 to a 62.8% increase, this source attributes the spike to Thor condensing its sales to the rental market, not a prediction of its volume for the future. Rather, Thor’s sales volume will likely fall more in line with the rest of the industry throughout 2013, putting it at closest competition with Forest River, based on past sales performance and their comparable complement of RV products.

Motorized Sales “From [May 2012 to April 2013], for a total of 12 months, right now motor home [retail registrations] are up 16%.” Towable Sales


http://www.berkshirehathaway.com/

RV Industry

“From [May 2012 through April 2013], for a total of 12 months, right now [retail registrations for towables] 9.5% [from year to year].”

“For towables, I am looking at the last 12 months [YTD comparison], and the top four companies’ retail registrations were: Thor, up 9.6%, Forest River, 11.4%, Jayco 3.2% and Coachmen 15.4%. Coachman is a Forest River company, but Forest River wants it reported separately. For motorized, the top four were: Thor, up 31.8%, Winnebago 21%, Forest River 23%, and Coachmen 17.4%.”

“For the first four months of 2013 compared to the same in 2012, towables for Thor were up 9.4% and, on motorized, they are 62.8%. Again, they have had a good growth on motorized product, but a lot of that has to do with the rental fleet. … I cannot break out [the stats on] their rental fleet.”

“The top five states with the most retail registrations of Thor motor homes for the past year for were: California, Florida, Texas, Illinois, and New York [in declining order]. Their towable products were Texas, California, Washington, Florida and Michigan.”

“The first four months of this year of the most of Thor’s towable [retail registrations] were in Texas, California, Florida, Washington and Ohio. On motor homes: California, Florida, Illinois, Texas and North Carolina.”

“On Thor’s motorized homes, for the first four months, they did rental units so that pushed the numbers up. They are screaming on motorized. In California, they are up 49%, Florida’s up 67%, Illinois 508% (they run all their rental registrations through a dealership in Illinois and they did a lot of rentals in that time period, which is why that number is so high), and in Texas they were up 51%. For towables, in the same first four months, they were up 7.6% in Texas, California up 21.4%, Florida up 39.9% and Washington was up 37.4%.”

Inventory “What we look at on a year-to-date basis is what is the relationship of [total units] retail to wholesale. I haven’t

updated through April, but 78,400 units were shipped wholesale through March 2013 and 44,794 were retailed, which means that if you subtract the retail from the wholesale, there were 33,606 units that would have been added to inventory on the ground. I do not know what the original inventory is on the ground. Compared to last year, there were 70,600 [wholesale]shipped and 38,763 retailed, so they added 31.837 to inventory on the ground. What that is is a 5.6% increase in added inventory over last year.”

“In a market that is up the way it is now, you would expect inventory to go up to match the demand, so I do not think a 5.6% increase, or addition to inventory, is anywhere out of line.”

Open House/2014 “Dr. [Richard] Curtin with the University of Michigan … did a forecast for the year based on wholesale shipments. He

[originally] said RV shipments were up in the first quarter and are expected to reach 309,500 units for 2013, a gain of 8.3% over 2012. That’s the highest level since 2007 as far as wholesale shipments. He said the outlook for the study is based on continuous and modest gains in jobs and income through the balance of 2013. Rising home values and stock prices will boost households well, which will have positive sales in RVs, especially in motor homes. He also said improved credit conditions and low interest rates will support sales growth. However, there are still concerns about how federal tax and spending programs and the implementation of Obamacare will ultimately result in growth uncertainties [for] 2013.”

“I have another special issue [forecast from Curtin] where … he is looking at 2014 to continue to have growth. He figured the end of this year will finish at 309,800 [total units shipped] and has projected 2014 will have 321,800.”

Competition “A 63% increase in motor home [sales] is not going to be sustainable for Thor. You’ll see that come back in line with

what the rest of the industry is doing. You just won’t see them jumping 63% [repeatedly every quarter] in and just 10% for its competitors [for example].”

“During the year, you’ll see retail spikes with Thor versus the competition because they go after the rentals. They will put out a rental fleet within a three-month span, so you have these rental companies that will buy a lot of units in a short time frame. That’s why you see Illinois made that big jump to 508%. That will come back in line with how their whole market goes as the year goes on.”

“Each manufacturer has their own niche [customer] they go after, but the two largest ones are Thor and Forest River. They make up 65% of the industry. They have pretty much a full complement of products, from folding trailers to class A diesel motor homes, the folding trailers being the least expensive and the most expensive, the class A diesel motor homes. My thought is it’s kind of a rising tide raises all boats. The rising RV industry is going be good for both of them.”


RV Industry

“Thor had success in rentals in early 2013. Forest River does rental, but they don’t do it at the same volume that Thor does, but they counter Thor’s [retail registrations in rentals] by concentrating on different products they have, which balances out [the sales].”

4. Publisher of RV trade publication

Thor is only “a step and a half” ahead of Forest River in terms of product sales, as well as general market and sales growth potential, according to this source. Most consumers are turning to these companies, as well as others, for practical, value-minded MSRPs and the companies are delivering. Thor’s volume and market share growth may hinge on its new 1-million-square-foot Elkhart facility, as there is still uncertainty about how the company intends to use a large section of the property. This source adds that a major hurdle for any company’s volume rests not on sales but on the current dearth of qualified and skilled workers on the manufacturer and supplier assembly lines.

Motorized/Towable Sales “The numbers for wholesale and retail speak for themselves. The numbers look good, but the baseline is pretty low

coming out of the recession.” “Towable is strong, but what’s lifting the industry [sales] is fairly practical [products]. “ “It’s hard to put your finger on [where towable sales will have the most volume]. … The oil boom is having an effect to

varying extents in different locales, and has lifted the market somewhat in Texas, not only for the workers’ temp living quarters, but for just the general economy. Texas has experienced the lift, as has a fairly wide area, including Montana, North Dakota and Minnesota. You even have oil spouting out of the ground in Pennsylvania and elsewhere.”

“What is happening is that [RV models] that used to be expensive is not about 20% less [in sales prices]. Let’s say the high-end RVs, for instance, many are one-fifth [cheaper] now. Sale MSRPs are very value-minded compared to a few years ago, just like our home values.”

“Sales are not the biggest issue for this industry, it’s finding qualified, skilled employees for … production, manufacturing assembly lines and supplier assembly lines. The skills sets and work ethic remain somewhat of an issue [specifically in the RV hub of northern Indiana].”

Inventory “It’s about where it belongs. It’s not too high or too low from what we are

hearing, consistently, from studies from BAIRD and the RVDA.” Open House/2014 “The official prognostication [for 2014] is 8.4% growth for the industry, and

an increment of that of 14%, according to RVIA analyst Richard Curtin.” “Everybody’s fairly optimistic (with an asterisk next to optimistic because

you never know what’s going to happen, especially since the recession). Things are pretty optimistic with one eye on the gas pump and another on the Federal Reserve.”

“A lot of the companies keep [next year’s models] close to vest. There is a huge soar in R&D for 2014. About 75% to 85% [of new products] haven’t been introduced yet, especially on towables. That’s coming in September.”

“It’s a general recovery and it’s not specific to a particular company. … Generally, the market tide is lifting a whole bunch of ships at once. Some guys are taking better advantage of it in terms of manufacturers and dealers.”

“Mr. and Mrs. America are carefully coming out of their caves. Home values are coming back and Americans, to an extent, are returning to camping. You look at KOA and their roughly 500 campgrounds, and they are having a really strong year. [In 2010], they had a record increase [of registrations] on Fourth of July weekend.”

“The buzz on the street in the industry is that things are batting down in terms of overhead and expenses. People learned a lot from the global downturn. Everybody is working hard and overheads are more accountable at every level. Managers at dealerships … are not hiring lawn services and got rid of the popcorn in the lobby. Having said that, there is some pretty spectacular sales performances going on at different dealerships.”

Competition

Mr. and Mrs. America are carefully coming out of their caves. Home values are coming back and Americans, to an extent, are returning to camping. You look at KOA and their roughly 500 campgrounds, and they are having a really strong year.

Publisher, RV Trade Publication


http://www.rvbusiness.com/2013/07/baird-dealer-survey-2q-demand-was-%E2%80%98robust%E2%80%99/

http://www.rvbusiness.com/2010/07/koa-sets-record-on-fourth-of-july-weekend/

RV Industry

“Thor, in some respects, is only a step and a half in front of Forest River. I visited last night with the president of Forest River and we were talking about business, in general. They are pretty savvy guys. … Thor is very, very different from the Forest River-Berkshire Hathaway outfit, but they both seem to have their eye on the ball.”

“Thor appears to be on a roll having added a million-square-foot facility in Elkhart County they haven’t yet moved into. From the sounds of it, I think the sky is the limit here for these guys. They upgraded to a tight approach. New CEO and president [Bob] Martin seems to be smarter than he looks (he’s a good friend of mine), and the new facility offers some unbelievable ability to continue to grow.”

“What we do know about Thor’s buildings in Elkhart, and is already public, is [and that area] is going to be overseen by the Keystone division of Thor. Thor Motor Coach will move into part of it with that division. That still leaves about [thousands] of square feet that nobody knows what Thor is going to do with yet. I wouldn’t imply that it’s a slow move. It’s really disruptive in terms of … this being the high time of production for the year.”

“I am hearing about a new company starting up that has a new line, and units that are 28 feet, pretty serviceable for Mr. and Mrs. America. These companies, like [Thor subdivision] Keystone and EverGreen [Recreational Vehicles Inc.], have their eye on the ball.”

“You don’t hear a lot of chest pounding [from Thor or other companies] even though everything is relatively in a good state.”

“I talked to lots of suppliers and I am not hearing much concern about [third-party U.S. distributors losing to overseas outsourced parts]. Lippert Components are kicking [doing well] right now, for example.”

Secondary Sources The following secondary sources show towable RVs leading the industry as it continues to grow, and the RV industry benefiting from increased interest among 35- to 54-year-olds. They also show Winnebego’s lead in sales growth among RV companies, Thor’s dominant market share in the RV industry, the revitalization by the RV industry of the top-producing area of Elkhart County, and the success of Lippert Components Inc.’s Level Up option as a must-have addition. June 26 RV Business article

The RV industry has seen an increase of 11.9% year to year for RVs delivered, while towable RVs leading the pack with the most units gained in May.

“Deliveries to retailers of all RVs were reported at 32,539 units in May, representing an 11.9% increase over the same month last year.”

“Towable RVs provided the largest units gains while motorhomes rose by a larger percentage increase in May.” “Seasonally adjusted, the May total represented an annualized rate of more than 322,000 units, a 3% increase

over last month.” “Through the first five months this year, total RV shipments have now reached 144,015 units, up 13% compared

to this same period last year. All vehicle types have enjoyed shipment growth this year with the exception of folding camping trailers, which were only slightly behind.”


http://thormotorcoach.com/

http://www.rvbusiness.com/2013/07/evergreen-adds-amped-toyhauler-travel-trailer/

http://www.lci1.com/

http://www.lci1.com/

http://www.rvbusiness.com/category/rvia-wholesale-shipments/

RV Industry

July 19 Investors.com article Customers ages 35 to 54 now represent the largest group of buyers pushing RV growth, with motor homes being the biggest seller. Winnebago has outpaced the rest of the pack with sales growing 55% in May, aided by its industry-leading bus-sized class A motor home, whose sales rose 35% or more during the past three quarters. Thor is shown as having the most market share of all RV companies with a 37.8% share of the towable market and 26.2% of motor homes.

“Shipments of motor homes jumped more than 30% this year through May vs. the same period in 2012, according to the Recreation Vehicle Industry Association.”

“Shipments of comparatively less expensive travel trailers rose 11%. Trailers make up a bigger slice of the RV fleet, with sales of 128,037 through May vs. just over 15,000 motor homes.”

“Most of the units are being bought by dealers to place in inventory, rather than sales to the final owner. Still, the rise in confidence is a welcome change after the industry rolled over early and hard when the economy tumbled.”

“Sales accelerated in the second half of last year. ‘You're seeing a release of pent-up demand,’ said analyst Gerrick Johnson of BMO Capital Markets. ‘People who hadn’t bought anything are now replacing (aging RVs),’ he said.”

“Winnebago is the leading manufacturer of bus-sized Class A motor homes. Its sales rose 35% or more over the past three quarters.”

“Thor leads the market in towables. Its sales surged 30% in its fiscal first quarter, which ended in October, but slowed to a 13% gain in the April quarter.”

“Drew Industries supplies slide-out mechanisms and other RV components. It saw sales jump 36% in its September quarter, then slow to 13% growth for the quarter ended in March.”

“Thor claims it is No. 1 in overall market share, with a 37.8% share of the towables market and a 26.2% share in motor homes. Brands include the iconic Airstream as well as Cruiser, Bighorn and Dutchmen and others.”

“Thor also builds lots of buses, making Winnebago more of a ‘pure play’ on the RV side.” “Winnebago has outpaced the industry, with shipments growing 55% to 1,978 units in its May quarter. Its

backlog, a barometer of future sales, leaped 130% to 2,846 units.” “Like home mortgages, interest rates on RV loans have gone up recently—to around 4.5% to 5%. But the rise

hasn’t hurt sales, Potts says, at least not yet. Analysts agree, but aren’t sure how further rate increases might


http://news.investors.com/business-industry-snapshot/071913-664440-winnebago-thor-rise-on-rv-cycle.htm?p=full

http://www.drewindustries.com/%E2%80%8E

RV Industry

affect sales. Johnson says customers are making larger down payments, which could offset the impact of higher rates.”

“In addition, about 30% of customers are cash buyers, according to Potts. ‘When a third of your buyers are cash buyers, it puts you in a unique class of consumer,’ he said.”

“Retirees are still drawn to RVs, as always. But customers age 35 to 54 have shown the largest gains in ownership rates and are now the largest group of buyers, according to the RVIA, the industry trade group.”

“More than 9 million American households now own an RV, the highest ever recorded and a 16% increase since 2001, the trade group says.”

“‘The towable market is poised to exceed prior peaks, but we see more cyclical upside in the motor home market as consumer balance sheets heal,’ wrote Robert W. Baird analysts recently.”

“Thor’s unit shipments rose 4.6% in its April-ending quarter vs. the same time last year.”

“Winnebago, which posted a 107% spike in earnings in its latest quarter, has been especially aggressive in rolling out new models, such as the new ‘Minnie Winnie’ and Itasca Spirit. It plans to launch a host of new 2014 models starting later this year, such as an all-new Winnebago Touring Coach line, including a Class B entry with improved fuel mileage at 15 to 18 miles per gallon.”

“Winnebago has had trouble turning a profit from its small business in towables, which it acquired in 2010.” “Despite double-digit year-over-year growth early in the year, the RVIA projects RV shipments to grow 7.5% for

the full year as comparisons get tougher in the second half of 2013.” “Meanwhile, demographics are working in the industry’s favor. People in the ‘sweet spot’ of the RV industry —

age 55 to 64—are expected to grow 15% over the next several years, or 2.9% on a compounded annual basis, noted the Baird analysts. That’s more than double the growth rate of the overall population.”

“Meanwhile, profits at the two top RV makers are expected to grow in double digits at least through 2014. Winnebago’s is seen surging 304% this year and 22% next year while Thor’s are forecasted to rise 29% this year and 20% next.”

May 23 NBC News article

The renewed interest and sales of RVs has dramatically increased the employment rate in Elkhart County, an area where almost half of the RVs out on the market are made.

“When you see an RV on the highway or in a campground, there’s a good chance it came from this area of north-central Indiana: Almost half of RVs on the road today were made in Elkhart County.”

“When the recession hit and RV sales plunged (58% from 2006 from 2009), and unemployment here soared to the highest in the nation: a staggering 20.9% in March 2009, compared to the nationwide unemployment of 8.7%.”

“As the economy recovers, sales have come roaring back, rebounding 72% from 2009 to 2012. In April, the jobless rate was 8.2%, closer to the national average of 7.5%.”

“You can see the difference at Keystone RV, one the biggest makers of RV trailers, where production lines are humming.”

“‘Business is certainly a lot better,’ Keystone president Matt Zimmerman said. ‘We're experiencing incredible growth, steady growth. We're still a little ways from that pre-recession-type number, but we like the trend and the pattern that we're seeing.’”

“It's showing in their payroll. As sales slowed, Keystone’s workforce shrank to 1,900 in 2009. Now, they have a record 3,200 workers and are still hiring.”

“‘There’s a big demand (for workers), so naturally, the pay goes up,’ Zimmerman said. ‘I think you'll see that throughout the county. Everybody is forced to do that because the labor pool is getting a little bit tighter.’”

“The RV comeback has reached beyond Indiana’s borders. At Camping World in Santa Clarita, Calif., business is booming.”

“‘Month after month, sales continue to go up,’ general sales manager Beau Bixey said. ‘I have more people walking around asking questions than I have sales people for.’”

Like home mortgages, interest rates on RV loans have gone up recently—to around 4.5% to 5%. But the rise hasn’t hurt sales. … Customers are making larger down payments, which could offset the impact of higher rates

Investors.com Article


http://www.nbcnews.com/business/rv-comeback-drives-hiring-boom-indiana-town-6C10056322

RV Industry

July 16 The Elkhart Truth blog article

The Lippert Level Up automatic leveling system, whose average weekly sales have grown 65% over the last year, is a must-have option, shown by every Sundance trailer sold having the option attached.

“With the recent re-growth of the recreational vehicle industry (up 13% for the year through May, after growing 13.2% in 2012), Lippert Components of Goshen, a giant among RV suppliers, has seen a lot of growth and plans to keep expanding.”

“Since Elkhart-based Heartland RV added the Lippert Level Up automatic hydraulic leveling system as an option on the Sundance travel trailer in January, every unit they’ve sold included that option. ‘We were looking for some key features that would set the Sundance trailer apart from other brands, and we felt the automatic hydraulic leveling was one way to do that,’ said Coley Brady, Heartland sales vice president. ‘The response has been outstanding.’”

“Lippert CEO Jason Lippert said, ‘The RV industry is moving more towards automatic leveling for travel trailers and fifth-wheels. We’re finding that OEMs are turning to LCI and Level Up to meet consumer demand.’”

“LCI’s average weekly sales of Level Up systems have grown 65% in the past year.” “‘At one time, automatic leveling was something found only on high-end units such as expensive luxury fifth-

wheel RVs, but now customers want leveling upgrades on less expensive fifth-wheel and travel trailer RVs.’” “Lippert Components is a subsidiary of Drew Industries, which this year announced plans to move to Elkhart

County and placed Jason Lippert in charge.” “Heartland is a division of Thor Industries, which moved to Elkhart earlier this year.”

Additional research by Cheryl Meyer, Marissa Yaremich and Lisa Bullock The Author(s) of this research report certify that all of the views expressed in the report accurately reflect their personal views about any and all of the subject securities and that no part of the Author(s) compensation was, is or will be, directly or indirectly, related to the specific recommendations or views in this report. The Author does not own securities in any of the aforementioned companies.

OTA Financial Group LP has a membership interest in Blueshift Research LLC. OTA LLC, an SEC registered broker dealer subsidiary of OTA Financial Group LP, has both market making and proprietary trading operations on several exchanges and alternative trading systems. The affiliated companies of the OTA Financial Group LP, including OTA LLC, its principals, employees or clients may have an interest in the securities discussed herein, in securities of other issuers in other industries, may provide bids and offers of the subject companies and may act as principal in connection with such transactions. Craig Gordon, the founder of Blueshift, has an investment in OTA Financial Group LP.

© 2013 Blueshift Research LLC. All rights reserved. This transmission was produced for the exclusive use of Blueshift Research LLC, and may not be reproduced or relied upon, in whole or in part, without Blueshift’s written consent. The information herein is not intended to be a complete analysis of every material fact in respect to any company or industry discussed. Blueshift Research is a trademark owned by Blueshift Research LLC.


http://blogs.etruth.com/businessbeat/2013/07/16/lippert-grows-on-rv-wave-of-optional-equipment-becoming-expected/

http://www.youtube.com/watch?v=IGwLJXZyv50&feature=youtu.be

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