The recreational vehicle industry represents a unique and timely opportunity for agents who are ready to diversify and grow their businesses. Get up to speed on a rapidly growing segment and the dealers who drive it.
In May, I was asked to present “New Business Opportunities: Agents in the RV Realm” at the 11th annual Agent Summit. I was honored by the invitation and excited to talk with agents about an industry that is close to my heart. I know RV dealers represent a massive growth opportunity for agents who have had success in the automotive space and are looking to diversify.
My goal was to offer a snapshot of the industry from the agent’s perspective and give them the information and motivation they need to visit the RV dealers in their markets. As a first-time Agent Summit speaker, I took it as a good sign that agents took photos of my slides throughout the presentation and asked pointed questions in the Q&A that followed.
It’s clear to me that agents are very much intrigued by the RV business but remain hesitant to dive in. And that’s a shame, because those dealers could benefit greatly from your hard-earned expertise.
With that in mind, let’s take a closer look at the RV realm and the opportunity that awaits ambitious agents.
Way Behind But Far Ahead
From the automotive perspective, we are quick to judge the RV industry based on how far behind we perceive it to be in several areas we know are critical to F&I and dealership success, including processes, products and technology.
Yet RV dealers have already mastered the one area the auto industry still struggles with: the customer experience. RVs are built for fun and buying an RV is an exciting, all-day, family-friendly adventure. That’s one reason RV dealers tend to hold enviable gross margins. Invoice pricing is unheard of.
So we know the customers are there, we know they’re there to buy, and we know they would benefit from protecting their investments. Injecting the aforementioned processes, products and technology into a fun and productive sales environment can pay massive dividends for all sides.
Competition and Approachability
In the weeks leading up to Agent Summit, I reached out to some RV dealer friends and asked how often they’re prospected by agents. The most common answer was if they see someone once a month, it’s amazing. Agents who work with RV dealers will tell you they face far less competition than they do for their auto dealer clients.
They will also tell you most RV dealers are far more approachable than the average auto dealer. Walk into an RV dealership and you will likely find the dealer is there, visible, fully engaged with staff and customers and receptive to opening conversations.
The fact is most RV dealers who are behind the F&I curve are well aware of it and increasingly curious about what steps they can take to catch up. They want a BDC, a CRM, a menu — all those great tools auto dealers take for granted but many RV dealers have never even seen.
An agent who has used those tools successfully and has the ambition to work with and learn from RV dealers can have a huge, life-changing impact in the RV realm.
Let’s Talk
So let’s say you’ve dropped into the nearest RV dealership, met the dealer and been greeted warmly. The dealer appreciates your visit and wants to talk. Where to start? For my money, the three key areas to focus on are:
1. Fixed ops: Service is a different animal in the RV realm. Retention rates vary wildly. Industrywide, they are very low, at least compared to automotive.
Don’t get me wrong: Plenty of RV dealers have built massive service centers and a steady fixed ops revenue stream. But many others have focused purely on sales.
A good lead-in is a lifetime limited warranty. It’s a dealer differentiator, a true “why buy here” product that has an immediate and lasting impact on service retention. Better yet, it gives RV buyers peace of mind, improves their ownership experience, and gives them a story to tell their families, friends and neighbors.
2. F&I: Not only do agents in the RV realm face little competition from other agents, they’re not competing with the factories either. Manufacturers are not trying to take over the service side of the RV industry. Far from it. Toyota wants their dealers to sell Toyotas and Toyota service contracts. Winnebago just wants their dealers to sell Winnebagos.
Maximizing this opportunity requires:
Service contracts, warranties and GAP are the big guns. But RV dealers would do well to sell more ancillaries like appearance protection, theft deterrence and key replacement. They deliver great value for customers and fewer claims and lower low loss ratios for dealers.
3. Reinsurance: The majority of RV dealers have never owned a reinsurance company or even participated in a walkaway program. The fact is that many of them simply don’t have enough volume to make it feasible.
Those who do will benefit greatly from forming a reinsurance company. They can grow their personal wealth with tax-advantaged income while achieving a level of financial independence they may never have dreamed possible.
Adding processes, products and technology can help dealers get to a place where reinsurance makes sense. But reinsurance is not a lead-in for RV like it is for auto. You don’t want to oversell a program the dealer may not qualify for.
When you are prospecting RV dealers, ask them if you can spend a day in each department. Ask questions, dig into the processes and identify opportunities to make changes.
Your Agency’s Opportunity
Diversification is good for any business. But timing is also critical. On the RV side, the timing could not be better for agents.
When everything is going great, dealers are less interested in new solutions. At the moment, RV dealers are loaded up with inventory and dealing with slightly slower sales after consecutive record years. They are eating a lot of floorplan interest and starting to wonder if 2022 will be a repeat of 2008. They know they need to create or maintain a competitive advantage and set themselves up for long-term profitability.
An experienced, professional agent can make a huge difference in the lives of RV dealers, their families, their employees and their customers. Yes, the RV business lags behind the auto industry in many ways. But it won’t be that way forever. There may never be a better time to break into the RV realm.
How Big Is the RV Industry?
According to the RV Industry Association, there are 2,667 RV dealers in the U.S., and they are projected to sell 591,100 units in 2022. That’s a slight drop-off from the 600,240 shipped in 2021 but still the second-best year on comparable record.
Mordor Intelligence values the North American RV industry at $26.7 billion as of 2020. Analysts expect that number to grow to $35.7 billion by 2026. That would be a compound annual growth rate of about 5% from 2021 to 2026.
88% THE VAST MAJORITY OF RV SALES ARE TOWABLE UNITS, INCLUDING FIFTH WHEELS, BUMPER PULLS, TOY HAULERS AND TENT TRAILERS.
50% ABOUT HALF OF ALL RVS SOLD IN THE U.S. ARE PRODUCED BY ELKHART, IND.- BASED THOR INDUSTRIES, WHICH COUNTS AIRSTREAM, JAYCO AND STARCRAFT AMONG ITS 17 BRANDS.
Thomas Johnson is a 25-year industry veteran who currently serves as RV and motorcycle program manager for NAE/NWAN, a Portfolio company.
