Ideas for Building RVs in China
by Philip Greenspun
Recreational Vehicles, also known as "motorhomes" or "RVs", is a growing
$14 billion industry in North America and, to date, one that has not
benefited from the cost savings possible either by factory automation or
by manufacturing in China. This is a fragmented industry with roughly
150 companies manufacturing RVs under their own brands. Much of the
work is done by hand not all that differently from single-family home
construction. There are a few companies with a large market share, such
as Winnebago, but they have not been able to exploit economies of scale
to bring their costs below those of shops that build only a handful of
Entry into the RV market is facilitated by the fact that dealerships
typically are not exclusive and carry multiple brands of RVs. Nor do
consumers expect to find a dealer close to their home. Winnebago has
only 310 dealerships to cover all 50 states and 10 Canadian provinces.
An RV need not offer state-of-the-art vehicle engineering and dynamics.
Most RVs are built on top of truck chassis designs that have not changed
substantially for 20 years or more. Drivers expect the vehicle to
handle competently at highway speeds but not to be nimble and responsive
like a passenger car.
The Recreation Vehicle Industry Association claims that total North
American RV sales in 2004 were $14 billion (www.rvia.org). Total RV shipments for
2005 are predicted to be 360,800, a slight drop from 370,100 in 2004,
which was the highest level since a peak in 1978. eBay reported that
"RV" was the most popular search term in 2004.
Winnebago's 2004 annual report claims sales of $1.1 billion and a market
share of 19.2 percent, thus indicating a North American market of
approximately $5.5 billion in size for larger motorhomes.
shows good growth in sales and profit. Winnebago sold 12,516 motorhomes
in 2004, indicating a total market size of something like 60,000 units.
Other leading manufacturers include the following:
- Fleetwood ($2.6 billion
FY2004 sales, $41 million operating income; historically a poor quality
product; a bit tough to interpret because this company also makes
"manufactured housing" and other non-RV products)
- Monaco ($1.4 billion FY2004 sales, $170 million profit)
Profit margins are better than for cars, at least for the companies
making a reasonably high quality product. Toyota and Honda earn
about 5 percent profit on sales and Winnebago closer to 10 percent.
Monaco is doing better than 10 percent profit.
There are five levels at which one could enter the North American RV
A good selection of these RVs, with photos and list prices, may be
viewed at www.lazydays.com.
- pop-up camper to be towed behind a standard car, selling
for prices ranging from $3,500 to $12,000 (average $6,500); the cheaper
ones are purely for sleeping and, perhaps, sitting. The more expensive
models have bathroom and kitchen facilities.
- travel trailer, to be towed behind an SUV or truck, selling for
between $12,000 and $100,000 (average $28,000). These have rigid walls
and extensive interior facilities.
- Simple camper-van. These are typically built starting from a base
of a standard full-size passenger van, i.e., about twice as large as a
minivan. The most famous example of this is the Volkswagen Vanagon with
its pop-up roof. These cost from $50,000 to $80,000.
- Full-featured 27-35' "Class A" RV (price range $50-100,000) with a
gasoline V8 or V10 engine in front and complete kitchen, plumbing, A/C,
generator, etc. systems.
- Deluxe 40' diesel bus-style motorhome ($200-400,000; sometimes
called "diesel pushers" due to the rear engine). Similar in theory to
the gas-powered Class A RV but much heavier duty and more suitable for
full-time year-round living and long drives.
The pop-up camper and travel trailer markets are attractive due to the
mechanical simplicity of the items. However the opportunity in these
markets is not that large and the potential for cost-savings is less
than than in powered RVs.
The Class A and diesel pusher markets are large and a huge amount of
very expensive North American labor goes into each RV. However, these
products are very complex and the potential for getting a bad reputation
for quality is high. Moreover the parts for these coaches, e.g., the
plumbing fixtures and 12V/propane refrigerators, are all built in North
America and are mostly standard across all brands of RV. In the long
run this is a good sign because there is so much opportunity to cut
costs. However in the short run it would be painful to try to ramp up
parts suppliers for all of these items in China and/or to import them
for manufacturing and then re-export them as part of a finished RV.
The camper-van market is large and the more deluxe camper vans can cost
as much as the huge Class A RVs that are suitable for year-round living.
The strongest competitor in this market was Volkswagen with its Vanagon
and they have temporarily withdrawn from the U.S. due to their high
costs of production in Europe. Consumers are accustomed to simple
camper-vans without kitchen and bathroom facilities. I propose that
entering the U.S. market with a camper-van is the best way to start,
moving up to more sophisticated diesel-pusher RVs once a dealer network
and reputation for high quality and good support is established.
Intended for a married couple with two children to go camping. If in a
national park campground it will be a fairly rustic experience. If in a
commercial campground with electric power it will be fairly comfortable.
Examples of successful products in this area: Volkswagen Vanagon camper
van (discontinued in the U.S.; photo;
Mercedes Viano Marco Polo (not imported
to U.S.; photo). Winnebago View is an example of a conversion of a
Mercedes/Dodge Sprinter Van ($80,000; details).
It would be ideal to build the product on the basis of a truck or van
built in China that shares parts with a truck or van already sold in the
U.S. The Mercedes Sprinter, Vito, and Viano model vans are being made
in China as of this year (Detroit
News). The Sprinter is sold at Dodge dealers nationwide and can
additionally be serviced at Freightliner truck dealers.
For our entry into a new market we don't want anything that is too
complex to service. Therefore this will be a simple RV with no plumbing
and no propane. All public campgrounds in North America have restrooms
and most have showers. Most campgrounds have picnic tables. If people
want to cook they can bring a Coleman camping stove, just as if they
were car-camping with a tent.
A Dodge Sprinter Van, passenger or cargo, costs roughly $40,000. After
conversion for sleeping, of course, this rises to $60,000 and more. A
20-year-old Volkswagen with 200,000 miles can sell for $10,000 and a
5-year-old Volkswagen with 50,000 miles on it can be worth $30,000
Nonetheless to deliver a high perceived value we should aim for a retail
price of $29,500 with a 3-year all-inclusive warranty. That means
selling to the dealer for $27,500.
The smallest Sprinter Van is 197 inches (5m) long and 76 inches (1.93m)
wide with a wheelbase of 118 inches and is available in several heights.
The largest is the same width but 263 inches long on a wheelbase of 158
inches and with a height of 104 inches (2.64m).
A Honda Odyssey minivan is 201 inches long on a wheelbase of 118 inches
and 77 inches wide, i.e., a very similar size to the smallest Sprinter
but not nearly as tall at only 70 inches (1.78m).
The old Volkswagen campers were approximately 4.57m long, 2.365m high,
and 1.845m wide, i.e., shorter than a minivan and the same width but
North Americans continue to expand through obesity so it seems safe to
assume that our RV needs to be somewhat expanded from the dimensions of
a 20-year-old Volkswagen camper. It would probably therefore be best to
build to the dimensions of the mid-size Sprinter Van, 226 inches long on
a wheelbase of 140 inches and adding a touch of width to 80 inches. The
height with the roof closed could be the same as the high Sprinter Van,
enabling many adults to stand up inside without the top popped, or about
one foot lower (92").
In an era of rising gasoline prices it would be nice to have a
fuel-efficient diesel engine. If powered by diesel fuel the vehicle
needs to have a range of at least 900 km. and should be able to maintain
a speed of 100 km/hr up a 6 percent grade. At maximum gross weight
time to accelerate from 0 to 100 km/hour should be no more than 15
Dual front airbags. At least four (total) seats with seat belts.
Front seats that swivel around to become part of the living room when
parked. The rear of the RV should have a dinette and/or sofa that can
fold down to become a double bed. All seats should be leather, a luxury
that should be inexpensive to build in China but that is not available
on U.S.-built RVs until you get to the $200,000+ level.
Cabinets for storing hanging and folded clothes.
Curtains and screens on every window.
The roof must pop up at least one meter to add an extra double bed,
typically used by a pair of children, with screens spanning the gap
between the raised roof and the rigid rest of the vehicle. Ideally the
roof would pop straight up, adding extra headroom throughout the vehicle
during the daytime so that normal adults can stand up inside the RV. At
night a rigid surface and mattress should be extendable at the normal
roofline and be usable for sleeping with roughly one meter of room
We are making an RV for the modern family, i.e., one that mostly does
not cook. Nonetheless the RV needs cabinets in which to store food and
a 12V refrigerator to keep things cold for a few days. It should also
have a 120V microwave oven for use when the engine is running (via the
inverter) and/or when the RV is plugged in.
High-capacity alternator, at least 175 amps. 4-6 big deep-cycle 12V
"house" batteries in the center plus the standard engine battery. A
battery charger for those house batteries that can take power either
from the engine alternator or from a 120V cable on the exterior. An
inverter to generate 120V power to the electric outlets from the
batteries when the RV is not plugged in.
Solar panels on roof to provide at least 50 watts of trickle charging
back into the house batteries.
The RV needs to be prewired with a GPS antenna on the roof terminating
in a connector on top of the dashboard for a Magellan 700 or Garmin
2620. There also needs to be a cigarette lighter 12V outlet on top of
the dash near a logical mounting location for the GPS. [We do not want
to include a GPS unit with the RV itself because portable GPS units are
getting cheaper and better all the time and many customers will already
own these for use in their day-to-day cars. Instead we make it easy for
people to buy and use state-of-the-art portable car GPS systems, which
are currently priced between $500 and $900.]
Many campgrounds provide a cable TV signal so the RV must have a cable
TV connection near the 120V cord. The RV should also have a TV antenna.
In addition to the normal engine-driven air conditioner and heater the
RV should have the following:
- 120V air conditioner for use when plugged in
- resistive heaters, possibly "heat strips" internal to the air
conditioner to enable it to function as an electric heater
- 12V exhaust fans
North Americans love to watch television and videos, even in the
wilderness. The RV needs to have at least a 19" LCD television and DVD
player, both of which will operate from the 12V batteries. In addition,
the RV should come standard with an XM or Sirius satellite radio. The
stereo needs to be able to play Compact Discs, AM/FM radio, MP3-encoded
CDs, and have an auxiliary input for an MP3 jukebox such as an iPod.
For people who are out traveling for long periods and/or who are
traveling for the purpose of a gear-intensive activity it is very useful
to have additional storage built into the RV. This is basically a box
stuck on the back of the truck and is referred to in the industry as a
"garage". The term "garage" comes from the fact that the area is used
to store bicycles and boxes. This should be about 1 meter deep and the
height and width of the vehicle. The garage should have adjustable
shelves and be more secure than the rest of the vehicle.
Examples: Visit www.fourwinds-rv.com and click on
the "Fun Mover" product.
Nearly all RVs come with an awning that extends from the top of one side
of the vehicle, is supported with arms going back to the middle of the
vehicle side, and provides shade to people seated underneath.
The RV should have a standard U.S. 2" receiver hitch, which could be
used for something as light as a bicycle rack or as heavy as a boat.
The minimum towing capacity should be 2000 lbs. or one metric ton.
RV dealers tend to be undercapitalized mom-and-pop operations with poor
reputations for ethics and customer service. There are some car dealers
that are also RV dealers but a principal problem with selling a $100,000
Class A motorhome through a car dealership has been that the financing
for an RV is very different from the financing for a car and servicing
an RV requires experience with cabinetry, plumbing, and propane that a
normal auto mechanic would not have.
Our initial products will not require much in the way of specialized RV
knowledge. We should therefore seek out car dealers that have won
awards for service and customer satisfaction.
Renting RVs is a lucrative and growing business without competition from
Hertz, Avis, and other large chains. One good way to deal with consumer
reluctance to trust a new brand and also to make extra margins might be
to establish a few rental centers nationwide. Renters who love the
product might turn into buyers. The most popular RV rental markets are
California and Las Vegas and a large number of customers are visiting
Europeans who wish to tour the National Parks. California Campers is
able to charge $100 per day for an old Volkswagon Vanagon. Cruise
America is the largest RV rental company and their new RVs are closer to
$200 per day.
The best locations for rental centers would be Los Angeles, San
Francisco, Las Vegas, Orlando, New Jersey, the major Canadian cities,
and, in the summer, Anchorage and Newfoundland. If we had infinite
capital and were to build enough rental centers, each with its own
service staff, we wouldn't need dealers at all, especially if we
contracted with a network of truck service centers to do warranty work
on the chassis and engine. Note that many of the highest-end coach
companies do not have dealers. Customers pick up the RV at the factory.
If they need service on the engine or chassis they get it at a local
truck shop. If they need minor service on the coach part of the RV they
get it at an RV shop of their choice. If they need major service they
often drive the coach back to the factory.
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