What will be the effect of Covid - 19 on the teardrop camper industry
This may be the year of the staycation, with more people willing to stay closer to home than travel by plane. If you have been reading RV related news over the last month, like I have, you’ll see that business is booming for many RV dealers across the US and Canada as the pandemic moves into its fourth month in North America. Many people are seeing camping or traveling by RV as a way to safely socially distance. People that have cancelled international summer vacations are looking for a way to safely have a vacation and the RV industry is seeing an uptick in business as a result. But what will this mean for the teardrop, squaredrop, and other tiny camper industry?
For one RV dealer, once their business was able to re-open after a 6 week hiatus, he is worried that he may not have enough travel trailers or motorhomes to fill the demand. Here’s an article that highlights an Austin, Texas dealership. El Monte RV, which has several locations in Los Angeles County, has seen a 400% increase in RV sales and rentals just in the month of April! This is not unique to the United States. “RV sales ‘surge’ as Calgary campers rearrange summer plans.” At a dealership in Alberta, Canada most of the staff was laid off as the country navigated it’s way through the pandemic. Now, they are reporting that nearly the entire staff has been brought back due to the surge in demand. Just in the last week, that dealership in Alberta sold 42 vehicles. A RV dealership in Missouri is delivering RVs three times what they normally do in a week.
RV rentals are booming as well, per RVshare, a peer-to-peer RV rental company. The week ending May 16, 2020 saw an increase of 650% in rentals. RVshare surveyed their customers and found that 93% of those booking a RV want to avoid crowds for their summer vacation. That is up 70% since the company’s last survey asked that question.
The stock markets have taken notice as well. Camping World management has noted that new customers appeared to be entering the market with fewer trade-ins, meaning there are more first time RV buyers. They also pivoted to online sales since most states or provinces enacted “stay at home orders.” Thor Industries and Winnebago Industries have also seen a quick recovery in their business compared to many other industries. Below are the latest stock charts for the last year. The charts are from May 27, 2020. The steep declines begin in late February or early March as Covid - 19 started to become a reality for North America. Unlike many industries, they all seem to be experiencing what is known as a “V shaped recovery,” a steep decline followed by a sharp increase.
But the real question is, “What does this mean for the teardrop, squaredrop, and tiny camper industry as a whole”? I created a very informal survey and sent it to many of the companies that have been advertising in Cool Tears and Tiny Camper Magazine. Some of the respondents are camper manufacturers while others supply parts or gear that many of us may use.
Please remember, this was not a scientific study. First, I’ll talk about part or gear suppliers. For the first three months of the year, the respondents reported that orders/sales were higher than they were in 2019. That’s great news and probably makes sense as most of us prep for our upcoming camping seasons. But the follow up question was how were things looking in April and May. I’m happy to report that orders/sales were higher than expected for those two months for the few companies that responded. Some of the feedback that I received stated that due to the “stay at home” orders around North America, that some people decided to cancel their summer plans and build a camper instead. Also, for people that already own tiny campers, this was the time to make some adjustments to their rigs.
The second group of respondents were teardrop/squaredrop manufacturers. Keep in mind, this is really before Covid - 19 came to North America. While it doesn’t look like the year was off to a great start with some of the manufacturers, only 40% of the respondents reported that orders/sales were lower than last year at the same time.
But remember the follow up question about how things looked for April and May. This data is not as rosey, but I’m not surprised. Many states shut down all but essential businesses beginning in March. For the manufacturers that typically build to stock, meaning you could walk in their showroom or office and drive home with a tiny camper that day, they were dead in the water. Their retail offices/locations were closed for most of this time. Zero foot traffic means low or no sales.
My prediction is that the tiny camper companies that have inventory now or have short build times will see an uptick in business similar to the larger RV industry. This might come in the form of sales or in rentals, if they offer them. A few respondents mentioned that there has already been a huge increase in their rental business. Also, a few respondents have stated that they have had many customers looking for trailers that are in stock and ready to go, but unfortunately, that manufacturer custom builds all of their tiny campers and their lead time is a few months, taking them off the table for a summer vacation in North America this year.
For the manufacturers that custom build all of their tiny campers, this may be a difficult year. Lead times for many of these can be anywhere from four weeks to seven months, depending on where your order is in the queue. Some people are showing interest, but are hesitant to put money down on something that they may not be able to use this camping season. People are seeking a safe way to have a summer vacation this year. The United States also has the worst unemployment rate since the Great Depression at 14.7% and it’s likely climbing higher. A senior economic advisor to President Trump, Kevin Hassett, said this week that it could be “north of 20%” for May and will likely go higher in June. These two factors, not being able to use the camper for months and the chance that they may lose their job is definitely putting a strain on our tiny camper industry.
What does all of this mean? I’m hopeful that the tiny camper industry will follow the big RV companies once the states open up. Due to their size, teardrops and squaredrops can often get a person or family camping relatively easily and quickly, with no need to purchase a new tow vehicle if they currently don’t have a full sized SUV or full size truck, so the cost of entry into tiny campers is much lower than with a larger RV.
Camping has been determined to be a low risk when it comes to Covid - 19, per this NPR article. So if you’re currently on the fence about purchasing a teardrop, squaredrop, or other tiny camper (and your financial situation allows), now would be a great time to support a small business and place those orders!