March 26, 2005 in Business

No letting up on the gas

Associated Press
 
Associated Press photo

Brian Griffitt, sales manager for Buddy Gregg Motor Homes in Dallas, stands inside a $1.5 million motor coach on Wednesday at the Family Motor Coach Association’s convention in Perry, Ga. He brought six motor homes to the show worth a total of $8.5 million.
(Full-size photo)

PERRY, Ga. — L.H. Boots, a retired Oklahoma rancher and oil man, enjoys traveling to Wyoming rodeos and Arizona horse sales in his $350,000 motor coach and he isn’t about to let fuel prices of more than $2 per gallon spoil his fun.

“At my age, I’m going to do what I’m going to do,” said the 90-year-old Boots, whose motor home was among about 6,000 parked at this week’s Family Motor Coach Association’s 73rd International Convention.

RV enthusiasts like Boots are one reason spiraling fuel prices have yet to put the brakes on the sales and use of gas-guzzling recreational vehicles.

RV shipments peaked at 370,200 units in 2004, the highest since 1978 and 15.4 percent higher than the 320,800 units sold the year before, according to the Recreational Vehicle Industry Association. Sales for January were 7.5 percent higher than the same month last year.

“We’re expecting another good year,” said Phil Ingrassia, spokesman for the 1,200-member National RV Dealers Association. “What people are telling us is that an extra $20 or $30 for a trip is not going to stop them from using their RVs. Some … have compared it to the cost of a couple of cheese pizzas.”

Indeed, the stock of the nation’s leading motor home manufacturer, Winnebago Industries Inc., has more than doubled to above $30 in the past two years. A disappointing earnings report last week prompted some pullback in the stock, but the company told analysts that aggressive discounting by competitors and some overproduction — not rising fuel costs — were to blame. Company chief Bruce Hertzke told analysts that vacationers may take shorter trips, but are unlikely to stop traveling.

“Nobody’s willing to stay home,” Hertzke said.

The federal government announced this week that the average price for regular gas had risen to $2.11 per gallon, the highest since 1981. With the higher prices, some RVers will pay almost $500 to fill up their 235-gallon tanks.

At the convention, which ended Thursday, some RVers expressed concern about the higher prices, while others said they might cut back slightly on travel. No one said the hike was enough to force them to abandon their vagabond lifestyles.

“When people are paying $1 million for a bus, they aren’t asking about the price of gas,” said David Welp, 64, a retired Texas Instruments executive, while relaxing on a sofa in his luxurious, 45-foot, 8-mile-to-the-gallon motor coach.

Doug Weatherly, sales manager for Detroit Diesel, a major engine supplier for motor homes, said most RVers who stopped by his convention booth wanted to discuss technical issues, not fuel economy.

“Fuel efficiency in this market is not an issue,” he said.

Greg Gerber, editor of RV Trade Digest in Fort Atkinson, Wis., said he didn’t think the higher prices would have much impact on RV sales or travel, since the average RVer driving only 2,000 to 8,000 miles a year would pay only $400 to $800 more for fuel.

The 1970s fuel shortage devastated the RV industry, but 2004 was a banner year, Gerber said.

“The big thing is availability,” he said. “If there’s a shortage, we’re doomed.”

Motor homes, which have gasoline or diesel engines, range from expanded vans with 25-miles-per-gallon turbo-diesel engines to 45-foot, bus-like luxury coaches with leather recliners, plasma televisions, washers and dryers and granite floors. The high-end models get only 5 to 6 miles per gallon.

Ingrassia, the National RV Dealers Association spokesman, said the motor homes in Perry represent the high end of the market, with price tags of up to $1.5 million. He said many families instead opt for towable RVs ranging from pop-up campers to lightweight trailers.

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