When the U.S. Government enacted travel restrictions in early 2020, people on vacation couldn’t get home due to the grounded commercial airline industry. They found their solution in the RV rental market. With an expectation of a bad sales year, dealers, experts, and manufacturers had no idea these early rentals would trigger a massive RV travel boom.
Before the camping season, RV sales trends in 2021 forecasted over 550,000 new units. Yet there are long backlogs, part shortages, and the 5 RV Industry price increases to compensate for higher overhead costs, which continue to complicate matters. First-time RV buyers and veterans want to know how to buy a new RV in today’s backlogged market.
We’ll show you the factors that “gummed up the works” and what the industry is doing about it. You’ll learn how to buy an RV without getting ripped off, even in these market conditions, and what’s going on in the used RV sector.
Despite the fact it’s a seller’s market right now, you still have options and negotiation leverage.
Where Did the RV Backlog Come From?
If you’re looking for one thing to point at as the cause for the RV Industry’s backlog, you’ll find that you don’t have enough fingers. It’s a culmination of many events piling up.
At first, once the world and the U.S. Government recognized the Coronavirus Pandemic, the RV Industry prepared for a bad year. After the April 2020 Global Shutdown, RV Rental numbers skyrocketed by 1,000%, and sales blasted up an incredible 30% in 2020. A sales number like this in an industry used to 5%-10% expectations is way outside the bell curve.
Motorhomes and travel trailers provided people a way to vacation, keeping social distancing and other COVID-19 precautionary measures and still relieving the cabin fever of being homebound. Veteran RVers and full-timers had to adapt quickly as new first-time RVers ate up campground reservations, making it challenging to travel before the pandemic.
With all of the increased sales, manufacturers, and vendors quickly ran out of inventory since the pandemic projections told them to prepare for a lean year. When a coach was missing a part due to a shortage, manufacturers would install a free upgrade to move the unit.
Once that solution was no longer viable, they started lining up nearly finished RVs. Once the missing parts came in, the piece would be installed and shipped. Towards the end of the 2020 camping season, wait times could be as short as two months. The problem was that many critical materials shared by other industries lengthened wait times even more.
RV manufacturers rely on these vendors for everything. It could be as essential as lumber for framing or as complex as a water heater. When everything stopped in April 2020 (except for essential industries), it interrupted the supply chain. As the economy opened back up, vendors had to catch up.
Other events, like the Texas Ice Storm of 2021 in mid-February, affected many vendor’s production lines. The storm affected the foam insulation companies that primarily exist in Texas and Louisiana. The climate is ideal for the foam to cure. Due to the drastic temperature drop, it took weeks for the foam insulation companies to return to work.
Other cogs in the production and distribution chain had problems, too. The rise in fuel prices due to various transportation issues raised overhead costs, and the overwhelming sales demand made it tough to keep up. No matter how efficiently technology makes gas distribution, fuel is the lifeblood of the industry and the lifestyle.
During all of this, Elkhart, Indiana, and the surrounding area were hotspots for the COVID-19 virus. Safety precautions and reduced staff slowed work. Currently, manufacturers have reduced work to 2-3 days a week because the backlog is so long. RVs came second in prioritized customer orders.
Is Now a Good Time to Buy an RV?
There are many reasons why you want to buy now versus later. The strategies used to buy a car help, but there are other things to consider. In this abnormal market, you can still get a good deal on the RV you want.
Price Protection Guarantees
RV insiders are urging people to buy now. From January 2021 to April 2021, there were 5 manufacturer price increases throughout the industry. No one expects prices to reduce. RV dealers known for their price protection guarantee temporarily suspended the practice because they can no longer absorb the loss.
For example, if you were to buy a full-profile fifth wheel for $62,000, and the manufacturer raises the price due to increased overhead costs by 3%, that’s an extra $3,860. If the RV dealer makes 5 sales where the RVs range in price, the 3% per unit could increase sale prices between $1,000- $5,000 each. No matter the size of the RV dealership, that’s a lot of lost revenue. Much of that cuts into their operational costs, not profit.
When you buy now, you’re starting at the current pricing level. There is an expectation that as the building and fuel shortages continue, industry cost increases will continue to rise. Basic business principles say, buy as low as you can.
The Unit You See Isn’t The One You’ll Get
It’s uncommon for an RV dealer to have a coach on their lot that’s ready to sell. Many keep a demonstration model on their lot to make their location look stocked up and give you something to walk through. After you have a chance to touch and feel the demo, then you can go inside and choose the floor plan and other features you want.
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For example, suppose you’re looking for a family-friendly travel trailer under 8,000 lbs. Your sales representative will take you to the Forest River IBEX 20BHS. The rep tells you that this coach is a demonstration model only. It has 6 floorplans to choose from, but they chose this one since it’s part of the 2021 RV Business Top 10.
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After you had the opportunity to look at the decor, inspect the many features, and try out the furniture, the sales rep took you inside to look at the floorplans. You need room for your children, so the bunks are essential, but the 24MTH toy hauler looks really appealing. You choose which options you want, fill out the paperwork, and the dealer reserves your order with Forest River.
Since you’re ordering your RV, this is the time to add whatever optional features you want. Before 2020, you could purchase discount RV parts and surplus, saving you money. In today’s market, vendors have their backlog lists. The general priority mentality is to fulfill RV manufacturers first, dealer stock second, repair service centers third, and then the aftermarket sector. If you try buying the component separately, it could take 8 months or longer.
As an RV Trooper, the best way to prepare yourself is to research ahead of time. Using the RV Troop website and others to find your top 3 favorite motorhomes or travel trailers is the best way to see everything available in the 2021 and 2022 model years (the model change will happen in June or July).
Before the RV backlog market, many dealers gave customers a 7-day protection program. If you change your mind and decide you want a different model, you could bring the RV back and exchange it for something else. In today’s market, that program is a practical impossibility. If they still honor it, your name goes to the bottom of the waitlist, and there may be additional costs.
Can You Negotiate the Price of a New RV?
If you’re wondering what you can negotiate when buying a new RV, the price is still on the table. Some dealers may tell you that the price you see is the price you’ll get; take it or leave it. If it’s around 15% above MSRP (Manufacturer’s Suggested Retail Price), that’s a reasonable expectation.
Always keep in mind that the RV dealership down the street can get you the same coach. The national chain dealers don’t get the preferential treatment with the manufacturers as they used to. They can’t get you higher on the waiting list or have any significant sway with the RV brands at this point.
The backlog waiting list is the first-come-first-serve. Manufacturers are building the more popular lineups faster than the less popular models. RVs are a significant investment; if there’s a particular model you want, they will build it. Wait times are averaging around 4 months during the late spring 2021 camping season.
Use websites like RV Trader and RVT to check out pricing on new models. You’ll find nationwide pricing around the country, state, or local area. These will be the starting prices. Each state and dealership has its tax, tag, and fees.
Websites like these also have links to RV finance calculators if you plan on going that route. The lender you choose will be the most accurate, but you’ll have a ballpark idea of what to expect. RVs, like cars, depreciate up to 30% in their first year and continue that downward trend of 20-30% continuously. To get the best rates, it’s always a good idea to walk in with some money in hand.
Other Tips for Buying in the Backlog Market
At this point in the 2021 camping season, you may not receive your RV until the fall. You may only get to use your coach once or twice before you have to prepare it for winter storage. You’re the only one who can weigh the risk-reward decision to wait to order during the off-season or take advantage of today’s prices.
Buying an RV is a big decision, and it’s a luxury item. Sales representatives sell RVs by selling the dream and showing you how the features make the coach practical for your lifestyle. Sometimes, miscommunications occur, and you can feel intimidated. It’s not supposed to happen, but in a sales environment, things can get tense.
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We’ve mentioned it above previously, but it’s worth mentioning again. Whether you’re at a big national chain RV dealership or a smaller one, you can always walk away if it doesn’t feel right. Every RV dealership is in the same position. The competitor down the street can order you the same model or something similar (or better) within your price range. The buying process should be a positive experience.
Almost all RV dealerships and some manufacturers offer camper-trailer virtual tours of their products. If you want to maintain social distancing practices, you can schedule a personalized walkthrough with their representatives. You and your family can connect your mobile device or computer to your LED TV so everyone can participate.
The agent can show you specific things in the RV and answer all of your questions. Some dealers will bring the coach to your home after the virtual tour for an actual walk-through and have the paperwork with them to finish the deal. Unless you’re lucky enough to buy a unit from the dealer’s stock, they won’t leave the RV with you, but you’ll have a chance to touch and feel the demo.
Beware of the Used RV Market
A good strategy is to look into the used RV market. You can find motorhomes and travel trailers in excellent condition. Due to the current market, you’ll find that used RVs are going up in value, especially those within the first 5 years of life. The problem is that if you plan on financing the RV, the lenders still use the actual value.
The best way to finance a used RV is to go through your financial institution, buy from an RV dealer, and choose the newest one possible. Once you and the dealership settle on a price, you’ll probably have to put some money down to cover the gap between what the lender will finance and the price.
For example, if the final price is $30,000, but the bank will finance $26,000, you’ll need to cover the gap of $4,000 out of your pocket. On new RVs, banks will cover 110% of the RV’s value, but their rules for used coaches might be less tolerant. The dealer might have alternative secondary lending programs, but you need to consider how much debt you can afford.
Some who bought their RV in 2020 may have realized that the RV Lifestyle wasn’t right for them after a few trips. Even before the RV boom, others may be looking to sell their RV, but they may still owe money on the RV loan. You may find that these owners owe more than the RV’s worth, so they’re trying to sell the coach for the loan price instead of the value.
During your initial walk-through, there’s nothing wrong with asking to see the clean title. If the RV is still in the repayment process, the owners will have a document stating the bank still owns the RV. A clean title is a government document that’s copy-proof. It will say that the people you’re talking to are the legal owners outright.
Most RV loans aren’t assumable. That means the lender won’t let someone else take over the loan. If you’re willing to pay off the loan, there’s a lot of risk on your side. The current owners have to use your money to pay off the loan, wait weeks to receive the title, and then sign over the title to you. Legally, if you use the RV without proof of ownership, the bank can take legal action against you.
Is the RV Industry Growing or Slowing? Survey Says…
According to a survey conducted by the RV Industry Association (RVIA), one of the two non-governmental authorities that regulate the RV Industry, 31% of the U.S. population plan on vacationing in an RV in 2021. The percentage translates into 56 million people. Their RV experience includes either borrowing a friend’s coach (with written permission), renting, or taking their own.
Currently (at the time we wrote this article), 48.1% of all Americans have received their first COVID-19 vaccination, and 37.7% are fully vaccinated. The Centers for Disease Control and Prevention updated the fully vaccinated guidelines, allowing those immune exemptions from precautionary restrictions.
Airlines and hotels are opening back up, and our society is starting to resemble a version of pre-pandemic conditions. Yet RVIA President and CEO Craig Kirby states in the survey article that “…RVing has been cemented as a mainstream travel option that is here to stay.”
If you’re looking for the best time to buy an RV, now’s the time. To have the best chance to get the best deal, find the ideal model, and have the ultimate RV adventure, make sure you bookmark the RV Troop Website and check in often. Our experts stay on top of the latest news, trends, and tips, presenting everything you need to know in one source.
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