Affordability Analysis

A record number of RVs are selling, while boats haven’t come close to prerecession highs. The industries are on different long-term tracks
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“The 1 percent are spending,” a dealer whispered at the 2019 New York Boat Show, gesturing towards a 38-foot, $750,000 center console crawling with shoppers. “We’ve written two today, and it’s not even noon. If people aren’t selling boats right now, they should give up.”

That is a common sentiment in today’s market, especially among dealers offering high-end boats in affluent areas: New-boat sales are generating more dollars than ever. And yet units still haven’t come close to prerecession booms.

Meanwhile, the recreational vehicle industry broke records both in dollars spent on new RVs and units sold in 2018, following a record 2017. Perhaps not coincidentally, many RV segments saw price drops between 2014 and 2019, according to the Recreational Vehicle Industry Association, and sizes are trending down, as well.

“The fact of the matter is, the RV industry is doing a much better job of pursuing the entry-level consumer than the boating industry,” says National Marine Manufacturers Association president Frank Hugelmeyer, who spent four years leading the RVIA. “That’s why the industry is outpacing growth.”

In their haste to respond to today’s market demands, boatbuilders have built larger boats with more technology, but few have focused on an affordable platform that will grow the industry, he adds. “I don’t blame manufacturers for doing this, but in the boating industry, they’re focusing on the customer they have,” Hugelmeyer says. “They’re making good margins on those larger boats, but to a certain degree it’s taking the eye off that future consumer that’s coming in. Basically, they’re ceding that ground to other industry sectors. That doesn’t mean that these people have to make choices; 30 percent of RVers own boats.”

RV manufacturers have continued to offer consumers a pathway on what Hugelmeyer calls the good-better-best journey. “They will fight tooth and nail and even take features out to get those price points down because they know how important they are to driving volume and maintaining that consumer of the future,” he says.

As a result, a new, entry-level RV could cost a family between $7,000 and $15,000. “That’s hard to find in the boating industry,” he says.

Class B vans have seen the strongest growth in motor home categories.

Class B vans have seen the strongest growth in motor home categories.

Booming

The U.S. marine industry is thriving in terms of dollars spent, with a record $42 billion spent on new and used boats and accessories in 2018, up 25 percent from 2014 and up 50 percent from 2009, according to the NMMA. However, an estimated 280,000 new boats were sold in 2019, down slightly from an 11-year high of 281,800 units in 2018, and a far stretch from the industry heyday in 1988, when 524,000 boats were sold. During the more recent 1995 boom, 320,000 boats were sold.

Meanwhile, RVs saw a record 494,556 shipments in 2018, says Statistical Surveys president Scott Stropkai. Preliminary data suggest that number dropped around 7 percent in 2019, putting shipments around 491,000 — still the fourth-strongest year on record, and well above the prerecession high of 390,500 in 2006.

“The big advantage the RV industry has seen is how its numbers have grown,” Stropkai says. “We’re seeing more people getting into it. Boating’s getting bigger dollars, but are all the people going to age out of it?”

The industries share common barriers — for example, both are cyclical, with products that are discretionary purchases historically dependent on a solid economy and strong consumer confidence. “Much like the marine industry, RV consumers and their purchasing decisions are impacted by many dynamics — the stage of their life, personal financial situations, specific features of the product and outside economic factors, such as wages, interest rates, employment and a host of other influences,” says Sam Jefson, public relations specialist for Winnebago, parent company of Chris-Craft. “Speaking directly to the RV industry, a large influence on the popularity of towables has been the boom in truck and SUV sales in the United States. Ownership of one of these vehicles makes it much easier to participate in the towable lifestyle.”

The Missing Middle

All of the above would suggest that smaller, less-expensive boats have also fared well post-recession, but that hasn’t always held true. Pontoons and aluminum fishing boats led the recovery, but early 2019 data indicate aluminum fishing boats will be off 7-plus percent for the year.

In 2006, around 22,000 of the 65,000-plus sterndrive runabouts sold were smaller than 20 feet; NADA’s suggested list price for a 2006 19-foot Regal is around $29,000. Less than 10,000 sterndrives were sold in 2019 after an 11 percent decline, and most were larger than 20 feet. The average price was more than $80,000 in 2018.

Affordable options are catching on for RVs, where towables make up around 88 percent of the market, says Justin Humphreys, COO of Thor Industries-owned Airstream. “The RV and marine industries have seen some similar changes since the recession,” he says.

For example, travel trailers have broken records, but Class A motor homes — similar to yachts and high-end cruisers — never fully recovered. Less expensive Class A and Class C motor homes have fared better, while Class B vans (which represent small, higher-end units) have had the most growth of the three categories. Humphreys likens the midlevel trailer slump to the sterndrive decline, and growth in the relatively affordable pontoon segment to gains seen in lower-priced camping trailers.

Airstream travel trailers are similar to trailerable ski boats: They are high end, offer a lot of amenities and are several times more expensive than standard travel trailers or fiberglass boats in the same size range. Both are also doing well despite prices that exceed $100,000, Humphreys says.

Airstream doesn’t focus on entry-level RVs, but the three major players — Berkshire Hathaway-owned Forest River and publicly traded Thor and Winnebago — cater to all segments through various brands. “When looking at the three RV brands in Winnebago Industries’ lineup, you will see a broad and balanced portfolio that ranges in price from a roughly $20,000 travel trailer to a luxury Newmar [motor home] unit at more than $1.2 million,” Jefson says.

About 85 percent of RVs sold in the United States are towables with no engine. That allows manufacturers to hold the line on prices.

About 85 percent of RVs sold in the United States are towables with no engine. That allows manufacturers to hold the line on prices.

Technology-Added Costs

The RV industry’s biggest price variances can be seen in the higher-priced categories, a reality that can be attributed to consumer shifts toward upscale amenities and the latest technology, Jefson says. The Class B market, which has seen new chassis and product advancements akin to the outboard sector, has seen a “noteworthy rise in product retail value.”

“A good example of this evolution is the Winnebago Revel, which is a 4-by-4 off-road camper van built on a Mercedes-Benz Sprinter chassis that is designed to go off the grid and allow you to reach campsites that were never accessible before,” he says.

The price hikes don’t affect all products equally because technology has come slowly to RVs, but it is picking up, Humphreys says. “One of our models, the Classic Airstream, has full smart technology in the product where you can control many of the functions of the trailer from your smartphone,” he says. “With a cellphone connection, you could operate it from the other side of the world.”

On a product with normal model-year upgrades, Airstream prices have gone up about 13 percent since 2015, roughly 2 percent per year. On models like the Classic, with a lot of added technology, prices have gone up about 25 percent.

Technology has also infiltrated more segments of the marine industry, where a luxury pontoon with quad 150-hp outboards can be priced in the six-digit range.

NMMA data shows that some marine product segments can reflect roughly 50 percent more product retail value than five years ago, Jefson says. “That is tied to the needs and desires of customers who are expecting products with higher horsepower, greater upscale amenities, and the latest electronic and technologically advanced equipment,” Jefson says.

R&D prices might be lower for RV manufacturers since, unlike marine manufacturers, many are utilizing components that already exist, says RVIA brand marketing and communications vice president Karen Redfern. “We do have manufacturers that have created technology components, but I think it’s fewer than what you find in the marine side because there’s not another application for the same technology,” Redfern says.

Outboard engine advancements have driven up costs across the marine industry because almost every boat has an engine, whereas at least 85 percent of RVs do not. “You can have more of those technological amenities in the product, yet the entry price for that vehicle is lower because there’s no engine that you’re paying for,” Redfern says.

Even the largest, most luxurious and most advanced towable RVs can’t compare to the high price of the motorized versions, but that dynamic doesn’t exist in boating. “You would never buy a 36-foot cruiser and just have oars to move it; you have to buy an engine,” Redfern says. “You’ve got to have a tow vehicle, but a lot of times that’s a family truck or SUV.”

Smart homes: Airstream models with the latest integrated technologies have seen 25 percent price increases in the last five years.

Smart homes: Airstream models with the latest integrated technologies have seen 25 percent price increases in the last five years.

Outpacing Inflation?

Marine dealers often comment that rising prices have priced out the middle class, but data indicates that larger, more expensive boats with more horsepower and amenities sell well. Meanwhile, the size and cost of RVs appears to be going down.

“I don’t think the average retail price has risen all that much in the RV industry,” says RVIA media relations director Kevin Broom. “Within the RV industry, I would say there are products designed to reach virtually every price point and lots of different choices of amenities, designs and all the different styles out there that people can tap into.”

The average cost of a conventional travel trailer has risen 15.8 percent since 2009, when it cost just over $20,000, versus $24,112 in 2014. However, by 2018, the average travel trailer had dropped to $23,188, a 3.8 percent reduction from four years prior, according to Broom.

Prices for folding camping trailers rose steadily in that time, from $10,575 in 2009 to $11,852 in 2018, a 13.5 percent increase in nine years. The only category to rise more in that period was Class A motor homes, which rose 32.3 percent, from $160,810 in 2009 to $212,755 in 2018.

The average outboard-powered fiberglass boat cost $27,892 in 2006, or around $36,420 when adjusted for inflation, according to NMMA data — still far less than the nearly $75,000 average in 2018. In the 21-foot-and-larger range, the boats went from less than $50,000 in 2006 (nearly $63,000 when adjusted for inflation) to almost $125,000 in 2018. The average price of a towboat jumped from less than $45,000 in 2006 to more than $100,000 in 2018.

“It would be a lot harder for someone coming out of college today, getting a job and buying a boat, than it was for me back when I was doing it because the boat, relative to my salary, was cheaper,” says Jack Ellis, co-founder of Info-Link, a Florida firm that tracks new and preowned boat sales. “Owning a boat is way more expensive than it was.”

Prices for entry-level boats have jumped in the last 15 years because of rising technology costs for engines. 

Prices for entry-level boats have jumped in the last 15 years because of rising technology costs for engines. 

Married Homeowner with Kids

The price increases in boats are compounded by the fact that household wealth has failed to return to prerecession levels, according to the Pew Research Center. “The median household income in 2015 — $70,200 — was no higher than its level in 2000, marking a 15-year period of stagnation, an episode of unprecedented duration in the past five decades,” Pew stated in a January report.

The share of American adults living in middle-class households decreased from 61 percent in 1971 to 51 percent last year, and the aggregate income going to middle-class households dropped from 62 percent to 43 percent between 1970 and 2018. Over the same period, the share held by upper-income households increased from 29 percent to 48 percent.

As of 2016, a typical American family had a net worth of $101,800, which is less than in 1998, according to Pew. Upper-income families were the only tier to increase their wealth in this century, adding 33 percent

to the median. Middle- income families saw their net worth shrink by 20 percent, and lower-income families experienced a 45 percent loss. Those figures could explain the brisk activity at the very top and very bottom of discretionary purchase sectors, and they hint that the entry point for new-boat buyers may still be too expensive for many American families.

Folding camping trailers can sleep four to six people and have only seen price increases of about 10 percent spread out over a decade, Broom says. “I don’t know whether this could be a driver, too,” he says, “but people are buying RVs specifically to spend time with family.”

Kayaks, Canoes and SUPs

It seems that people are finding purchase points that let them access the water, whether at the expense of space or in opting to buy preowned. (There is no preowned RV data, something Stropkai says should soon change.)

Personal watercraft is one of only two categories posting growth in 2019, with 72,752 registered for the year, according to Statistical Surveys. Some PWC seat three people, meaning a small family could get on the water in a new PWC for around $7,000 to $20,000.

The marine industry doesn’t count kayaks, canoes and SUPs among its total because only a handful of states require them to be registered without propulsion, Ellis says. However, kayaks have anecdotally had a good year, given the explosion in kayak fishing. SUPs are also being rigged to fish; both range from a few hundred to a few thousand dollars. Given how quickly powerboats have increased in price, these types of watercraft could be where the critical mass can find a point of entry.

“Every brand doesn’t have to build a good-better-best, but there has to be a good option in the good-better-best pathway for the consumer,” Hugelmeyer says. “It seems that, right now, it’s becoming a rarer and rarer commodity in boating, where a lot of growth on the RV side is in those smaller, entry-level products.” 

This article originally appeared in the March 2020 issue.

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