Have you wondered what's behind the RV backlog and why new RVs are sold out for many, many months to come?
As they say, it's complicated. And very frustrating to the industry. Even more frustrating for those who wanted to buy and go traveling in an RV this year.
That's what we dig into this week in Episode 349 of the RV Podcast.
Here's the complete audio version.
And here's the video version, from our RV Lifestyle Channel on YouTube:
But the main reason is the continuing shortage of parts and chassis and the unprecedented, overwhelming demand for new RVs. Quite frankly, most of the major manufacturers are sold out!
The RV Backlog and Dealer Shortages is unprecedented
Let's start with a vivid example of how big this problem is. The numbers from Thor Industries -the world's largest RV manufacturer – are staggering.
Thot's CEO, Bob Martin, was brutally honest in an interview he did with CNBC last week. He said they have $14 billion in backorders for new RVs. Let me say that again: $14 BILLION…with a B.
They are SOLD OUT for the next year
Thor Industries is the company that owns many popular brands including Airstream, Jayco, Dutchmen, Heartland, Hymer, Keystone and many others. It makes tow-able trailers and RVs of all shapes and sizes.
Martin said that demand took off during the pandemic, and it keeps growing day-by-day.. In the US and in Europe, Martin said they are unable to build units fast enough and that what they do build are promised to customers who have been waiting, sometimes for months. As a result, inventory on RV dealer lots is extremely low.
It’s not just Thor. This is happening across North America.
The RV Backlog is the result of a perfect storm of circumstances
A cascading series of events came together to create this crisis:
- First, it was COVID plant closures that halted RV assembly lines for weeks
- Those closures also shuttered the factories used by RV suppliers, creating an instant parts shortage.
- The resulting delivery issues caused a total breakdown in the supply chain has now put the industry in the never-before-experienced position of having unprecedented, massive demands… but no inventory to give them.
What follows is a series of very candid interviews that unpacks this crisis from the perspective of the three major players in the RV Industry – an RV manufacturer, a parts supplier, and an RV dealer.
A Manufacturer's Perspective in the RV Backlog
To get an idea of what it's like from a manufacturer's perspective, we interviewed our friend Dean Corrigal from Leisure Travel Vans up in Winkler, Manitoba, Canada. Here's the edited transcript:
Mike Wendland: Dean, what's it really like? We keep hearing all this stuff about inventory, sold out, sold out, nothing available. Give us a reality check.
Dean Corrigal: In normal times when you go through a tough time in the RV business, it's because you don't have a lot of sales.
This is the opposite. We have lots of sales, lots of great people aboard our Leisure Travel Vans, and we feel bad that we're not building them as fast as we can.
We have no products to build with
But I've never, ever in the industry seen the supply chain so damaged that we can't actually build because we have no products to build with. Never seen that before ever.
Mike Wendland: Give us a sense when you say the supply chain, what exactly has happened here?
Dean Corrigal: So it all starts back when everything shuts down, back in March last year. Remember the industry just shut down.
So eventually there has to be a catch-up because nobody's building anything, right? So, for example, just to give you a small example, in 2020, we sold 500,000 RVs as an industry, but we only built 380,000 RVs, which means that the dealer inventories sitting on dealers grounds of RVs of over 150,000 RVs were then eaten up, swallowed, right?
All the suppliers are playing catch up
Now you've got to replace that 150,000, plus you have this massive buying of RVs, which we call the COVID-19 RV buying frenzy, that's what I've nicknamed it. So you're playing catch up. All the suppliers are playing catch up, and then we had the microchip issue with the chassis manufacturers, which is huge.
Take Ford and their Kansas City plant. They build 1,250 F-150s a day in that plant, a day, and they build 600 Transits a day.
That factory has been shut down for nine weeks. The president of Ford and I watched him on Automotive News, said that they will never catch up to what they lost.
Mike Wendland: Never catch up?
Dean Corrigal: Nope, because they built 1,250 a day. They've been shut down for over 12 weeks. 1,250 F-150 trucks a day, 600 transits, he said they will never get caught up, that's what he said from those numbers.
Mike Wendland: Now let's talk about the Transit chassis in particular which has become a hugely popular RV chassis. Is there any end in sight? Is there a time where we expect to get them delivered in a reasonable time?
Dean Corrigal: So the F-150 plan or the Kansas plan, the Kansas City plan is up and running today. I think they started back up again. We already got some stuff that we're scheduled to be built for us according to our purchasing guys, so we're excited about that.
We think that we're probably a month, a month and a half or two months out from getting 2021 chassis.
So what we've had to do is we've had to slow the lines down right because we only have so many chassis on hand, and we're trying to keep our people working employed. The last thing you want to do is have to lay people off because they're going to have to find other jobs and then the whole thing becomes more of a problem.
Plus we have had some serious COVID issues in our province. So the government is like, “If you can work at home, work at home. If you don't want to go to work, you don't have to go to work.”
We've really had to slow the lines down in order to keep people working, and to use up whatever chassis we have left.
Mike Wendland: How far ahead are you guys technically sold out?
Sold out for 18 months
Dean Corrigal: 2021 chassis, that's what we're waiting on from Ford. Yeah, we're sold out. It's hard to say this, but I would say we're probably 18 months sold out I would think.
Mike Wendland: That's about the standard. That's what we're hearing from all the other manufacturers.
Dean Corrigal: Yeah it's crazy.
Mike Wendland: This is the flip side of the nobody's buying situation. People are buying, but there's nothing for them to buy. What do you tell folks who say, “18 months?” I mean that's a crazy thing. That's for the Transit chassis. What do you say to them?
Dean Corrigal: First thank you for ordering one is the first thing.
Mike Wendland: Of course, yeah.
Dean Corrigal: We do appreciate the loyalty from everybody but yeah, I think the supply chain's going to get better.
I think once Ford starts rolling again, I mean that plant, I mean I've been to that plant. I mean they run 24/7. They shut down I think one day, one Sunday a month, that's it. They run three shifts.
I've never seen anything like this RV backlog
I've never seen anything like it. When they're full production, they're building. We're hoping that this is we're going to get it going. Our people are ready to go. We're waiting for chassis.
Then the other thing too is Mercedes, with the Sprinter chassis.
They got into a little fight with the EPA. So the EPA fined them some money, and they're waiting for certification for emissions on the diesel to 2021.
Now they've built them, the chassis are sitting in I think Baltimore compounds, Mercedes compounds waiting for the EPA to rubber-stamp the EPA approvals so that they can start shipping chassis.
So not only will you not had any Ford chassis, there's been no 2021 Mercedes Sprinter chassis either.
Mike Wendland: The Sprinter is very popular. You built the Unity model on that, and of course, the Sprinter chassis with Class Bs and the van life craze has made the demand crazy. But this RV backlog issue has to have a long-term effect on the buying public. How many of them are just going to give up in the long run and say, “It's not worth it. I'm going to go on cruises instead.”
Dean Corrigal: I know it's crazy. It's a crazy time like I said. I don't think anybody. I mean Bob Martin of Thor would know better than anybody.
I don't think anybody's ever seen anything like this ever. I mean we never have.
I mean we've had times where we've had no business where the RV business was in a slump and nobody was buying. We've been through three or four of those but never been one where we had this huge supply or demand and we can't supply it.
Mike Wendland: Just as there's an end to those times, those lean times, hopefully, there'll be an end to this parts shortage and RV backlog situation. I have one other question. Jennifer actually raised this the other night on our Ask Us Anything program.
What are manufacturers going to have to show display at an RV show like Hershey comes out, the big fall one that is on this year? What is there going to be to show?
There will be new RVs to show at Hershey this fall
Dean Corrigal: Yep they are going to try the Hershey show. We are going to do the show. At least right now, it's tentative to go, so that's exciting. We will be trying to supply some product because we've been really focused on trying to build the retail customer units.
We're not building any dealer stock. We're not building any show units. We're just trying to push what we make to our great customers that have ordered our units, and try to get them looked after first, so we'll see how that goes on Hershey.
Unfortunately, there's a lot of people that have never seen a Leisure Travel Van.
People are buying RVs without even seeing them!
I have hundreds of emails from people, “Hey I ordered one. I've never actually seen it.”
We have to celebrate there because you're the best, but we would like to at least have some show units out there so people can see them.
Mike Wendland: Hey Dean, I hope to see you at one of the shows coming up. I know you do the western states, and we love your videos on Leisure Travel Vans. I know you guys have some great products in the pipeline. You just need to get those chassis like everyone else. Thank you for making some time available to us today, and helping us get an understanding of this widespread shortage.
Dean Corrigal: Yeah we apologize. We feel terrible about it honestly. It's very frustrating from the manufacturer's point of view that we can't look out for our customers. We love our customers and we want to make them happy, but it's tough times.
A Supplier's Perspective on the RV Backlog
Next up, we travel to Elkhart, IN, the RV Capital of the world and the epicenter of the RV backlog and parts shortage. We interview Nick Godfrey, who works for Daycorp, a parts supplier that makes the Equalizer brand of automatic RV levelers.
Here's an edited transcript.
Mike Wendland: We are in Elkhart. And Nick, we know that RVs are selling like crazy, but we keep hearing about parts shortages and the RV backlog affecting everybody. Tell us about that.
The RV backlog is also because raw products aren't available
Nick Godfrey: So, a big thing that has really affected the RV industry regarding parts shortages isn't even necessarily that the raw materials aren't available.
A lot of it is shipping and transport that has slowed things down.
We've run into that a little bit here, for sure. We do have some things that come in on a boat. They get caught in ports. We've seen a lot of the videos of some of these boats that are just stuck on the water, can't even get into the port to deliver things.
We get things that come in from Europe, and they get hung up in the ports.
There's also a labor shortage
Another thing that we've all ran into around here is a labor shortage. Hiring people has been a challenge. You drive around Elkhart, anywhere right now, literally, every RV production line and supplier has a “now hiring” sign out front.
There have been some challenges, but at Equalizer, we have worked extremely hard to not hold anybody off. We haven't shut anybody's production lines down. We've been working 60, 70 hours a week in the production shop, on weekends and all that. And we're going to keep doing what we do, and we're going to get the job done.
Mike Wendland: I drive around Elkhart, and I see just acres and acres of RVs. They look like they're finished.
Nick Godfrey: They're close. They're probably really close, but they're probably sitting there waiting on a part or two to be able to clear it to ship.
RVs that are built but can't be shipped because of a part or two
If you could get into that yard, you'd see a don't ship tag on a lot of those.
And it could be something as simple as a water fitting or a window or a stereo. Just one or two little parts is holding that unit up from being ready to go. That's been something that the whole area has been dealing with for the better part in the last eight to 12 months.
Mike Wendland: Any idea when there's going to be relief on this?
Nick Godfrey: If anybody could answer that question, we'd all be in a better spot. Because that's what everyone wants to know is what is it going to take to dig out of this?
And the problem is that every one of those parts suppliers is up against something different, whether they're just not able to hire people to do the work, or they can't get the materials in to build the parts. There's something different everywhere right now.
And so, as long as units continue to sell like they've been selling, we're not really sure when this lets off. Right now, we're just going to keep riding it as long as we can and doing the best job we can to make sure everybody keeps running.
Mike Wendland: Some of these units, you order them and it takes as long, I'm hearing, as three years for something to be done.
What about price hikes during the long RV backlog?
Nick Godfrey: That is a serious waiting time. And the hard part with having a three-year lead time, a 36 month lead time, is that if you sell a unit of X number of dollars, over the next three years, the price changes in the components to build it.
That's something that we're all kind of trying to figure out. Our purchasing and inventory manager, he's a genius when it comes to this stuff. But he's getting hit with price increases regularly, and we've got six-month lead times on things.
And from the point where he puts in the order to the point when the parts show up, our price could change multiple times. But we do everything we can to not pass that increase along to our end customer as well. We just try to find a way to be more efficient.
Mike Wendland: What I keep wondering about is that with how great the RV business is doing won't things catch up pretty soon?
Nick Godfrey: You would think. But if there's a 36 month lead time on some of these motor homes it's going to take time. They're a little bit better on towables because they build faster. But if people are willing to wait, and the orders just keep piling up and the dealer has got nothing sitting on the lot, and as soon as it shows up it's spoken for.
If people are willing to wait, I don't know where this stops. But it's something that we're all finding a way to navigate through. It hasn't been easy, but we're doing it.
A Dealer's Perspective on the RV Backlog
For our final interview, we head south to Gainsville, FL, where we talk to Nick Schmidt, of Sunshine State RVs. Here's the edited transcript:
Mike Wendland: Give us a perspective of what these parts shortages, what these delays, what this RV backlog situation means in terms of being a dealer? Right now, out on your lot, your inventory, how's it compare to previous years? What are the issues you're seeing?
It's absolutely insane
Nick Schmidt: Oh, it's absolutely insane. I mean, this is unlike anything that we've come across in the last 15 years, dealing in class B RVs.
We've never seen anything like it.
It's making my job more of, instead of being someone that buys and sells RVs, I'm more of like trying to facilitate when RVs are coming in for people.
There's so many parts that are missing, chassis issues.
We have 20 class B vans sitting at the Coachmen factory right now waiting on awnings and running boards and just 20 people that have been promised RVs by now that are just from us, they're just waiting, man. I got a hundred more that are just going to be coming down the pipe.
Mike Wendland: We were just in Elkhart. We went by the Coachmen factory in Middlebury, IN. They're everywhere. I mean, they just line after line and they're all, they're done, except for just a couple of minor parts. Out on your lot now, what do you have in terms of inventory compared to what you would have had pre-craziness?
Nick Schmidt: Typically, we keep about 60 to 70 new class B RVs here in Gainesville, all in our dealership. Right now, we have 28 new ones.
Begging for inventory
I'm begging, borrowing and stealing and doing whatever I can to get those here from Winnebago, Roadtrek, Coachmen, American Coach, Fleetwood IROCs, whatever I can get my hands on. We're trying.
But we're less than half right now. It's just going to get worse.
Every body, every manufacturer I'm talking to right now is telling me that they're having these issues.
It's not just the parts. The next issue, in the next 12 months, are the chassis. Mercedes hasn't made a 2021 Sprinter yet. Ford has not made one yet. They're not giving anybody them.
Dodge chassis are the most available
Dodge is the only thing that people can build on. So they're having to disperse it amongst Coachmen and Roadtrek and Winnebago and all these others like Amazon and UPS, everybody, because Dodges are the only things people can get right now.
Mike Wendland: It's ironic because we keep seeing in the mainstream media, “Oh, the RV industry is wonderful and everybody wants one.” But what nobody's caught on yet is you can't get one.
Nick Schmidt: Yes. That's more frustrating. For us as dealers, when people want them and we can't give them what they want, that's more frustrating than anything else. Then people, customers come on the lot asking for RVs. They're asking for these specific things.
They're getting frustrated at us that we can't produce them. Typically, it's the exact opposite way around. Typically, two years ago, I had a lot full of RVs and I'm looking for people to buy them. Today, I got a list full of people and the RVs that I have, I'm trying to give them to the people that are waiting for them.
Is there an end in sight?
Mike Wendland: Nick, is there any end in sight to this?
Nick Schmidt: Factories are telling me by the end of the year, their chassis shortages should work themselves out.
They're doing a great job of finding alternate parts. Instead of one manufacturer for an awning, now they're having three manufacturers for awnings. Instead of one manufacturer for running boards, they're finding other people that can make the running boards.
That way, when one company can only get them 20 this week and they need 50, they can go to those other companies and they can get other running boards.
So the end is, the manufacturers are getting a little more resourceful. The real issue is they're coming down the pipe, but they don't have the chassis. That's becoming a bigger issue now that the chassis just aren't as available as they have been in the past from the manufacturers.
Mike Wendland: Now, you guys have always specialized in having a great inventory of used RVs. How is that? Is that down or do you still have a lot of used ones? Are more used ones coming on the market or are people holding onto them longer?
People are holding on to their RVs longer, making used inventories low
Nick Schmidt: People are holding onto them longer. We are getting some used ones, but people are holding on longer. Because they're trying to trade them for something, because they love the lifestyle.
They love the freedom it gives, the flexibility. Just like you, they love being in their class B, B+ RV and traveling around. They can't imagine life without one.
But when they go to trade it in, the dealerships don't have what they want. So they're not trading their used ones in. They're not selling their used one. They're just holding onto it.
We're getting squeezed from both sides
We're getting squeezed from both sides. From the new, we can't find chassis. From used, people aren't getting rid of them. We're having this juggling act of, how do we keep our people happy?
Mike Wendland: Nick, I appreciate your candor and good luck, man.
Nick Schmidt: I'm very thankful that we're not having an opposite problem, that people aren't wanting RVs and not wanting to RV. I'm very thankful the problem is, there is much more of a demand than supply. Because the opposite problem is a totally different problem. That is no fun.
This is, at least, people are excited when they finally get their RV and they finally get to get out and travel and see the country. That's such a great, satisfying feeling for us when we can finally get people the RV they want so they can do what they want with it. But this is a good problem to have. But nonetheless, it's still a problem.
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