Fleetwood RV business struggles

Hello, what's your point, what are you getting at.

The recreational vehicle industry hasn't crashed, might be a bit harder to sell, that's it.

Quote "Fleetwood Corporation, has partly blamed “a shift in buyer preference towards lower specification budget vehicles” for reduced sales within its Recreational Vehicles division"

Does this mean that the swing towards the large "gin palaces" has reversed and the smaller vans without full en-suites and pop-tops are becoming more popular again?

1 word...JAYCO....judging by the amount of them out and about lately.

Poor management decisions and not reading the market trends. There is strong demand for off-road models which fleetwood don't manufacture (we had to wait 5 months to get ours built last year). Why shift your caravan manufacturing to WA when the majority of "grey nomads" retiring are from NSW, Vic and Qld. Freighting new vans to the eastern states for sale must make them less competitive.
Also they were overgeared for the mining boom in prefabricated accommodtaion.
There is still a market out there for good quality vans but Fleetwood has made poor decisions and are now paying the price.

The way I read it is they are like a lot of businesses these days suffering from poor margins. Their turnover of $111m was down 16% and they lose $4m? That means all their profit is in the last 10% of the money they are collecting. That's pretty common for a lot of businesses and they are going broke because the costs are fairly well fixed but the turnover isn't. It's fashionable to blame governments but I think the culprit is too much information and therefore too much competition. Every business is competing globally now because most people have a live product catalogue sitting in the house. Some people might say that they will pay the extra to support local business and that's great but the next 10 buyers will opt for the cheap import. Things are becoming throw away items so why pay a premium? The boom businesses lately are couriers delivering online purchases.
As an extra observation...has anyone noticed how much it now costs to go to the rubbish tip? It's starting to cost more to throw stuff away than it is to buy it.

Here's my take on the Fleetwood whine ....

1. The report is an ASX report - a statement from a public company designed to explain to shareholders why they can't pay them their 10% dividend this year - while the directors have just given themselves a 20% pay rise, and just bought a fleet of new company Beemers for every director and every senior executive.

2. The statement omits the fact that Fleetwood went into mining transportable construction in a big way in recent years. The mining industry has plateaued - nearly all the major projects have completed their "construction phase" and are settling into their "production phase".

The number of minesites that installed camps in the period from say 2004 to 2012 increased by about 10 times over normal expansion in that period. This period saw the biggest "boom" in mining since the 1890's. Added to that, was an explosion in natural gas project developments - some of which, cost upwards of $50 billion.

If you have a once-in-a-century boom, you're bound to have a bust following it. The decline in mining housing requirements has probably impacted Fleetwood more than the RV business.

3. Many people are probably coming to the realisation that buying an $80,000 4WD, plus a $90,000 caravan, adds up to a $170,000 "investment" that is actually two major liabilities that depreciate at an enormous rate.
They also need to be insured, registered, stored, and maintained - all at a very substantial annual cost.

With the trend to smaller blocks and more intensive "in-fill" housing developments, less and less people have room to store a big 'van.
Many people also now realise they can put the money they would otherwise spend on a 'van into a term deposit or shares - and get extra income - and they can hire vans or motorhomes, instead of owning them.
Most people only use 'vans for short periods - so the burden of owning one is a pretty hefty cost for a short annual holiday period.

The viability of owning a decent 4WD and big 'van is only justified if you're going to spend a long period of time on the road. This group of people do not make up the majority of caravanners. The majority race off on a holiday for 2-4 weeks and then have to go back to work!

Fleetwood merely have to "manage" their production back to a level of normal demand. The RV market has been increasing at a phenomenal rate in the last 10 years - and a return to normal production is something that is on the cards and which good managers plan for.

Perhaps too people are realising it is unreasonable to have a caravan that has a higher level of luxury than most of us have in our homes YET STILL does not have a full sized queen bed.

In the past the caravan was a low cost working family man's way of having a holiday.

When the times get hard the low cost option thrives at the cost of luxury.

all those thousands of fairly well off people who lost a lot of money in the GFC aren't going to be buying top end luxury caravans are they now.

If they want to continue with their plans, ( many wont) they will reduce their expectation and oh yes play in the the lower priced, better value items.

cheers

I've owned a couple of new Coromal products, and on each occasion found the quality not to my expectations, in spite of paying a premium.

Also, I've found they are VERY slow to innovate and keep up with the other manufacturers in terms of modern inclusions.

I'm happy to pay a bit more for quality of manufacture, but sadly Coromal is not worth more than any other Australian manufacturer offering similar quality at a better price.

They can blame their loss of market on whatever they want. The reality is they charge a premium price for an average product.

That's why they're losing sales.