Ideas for Building RVs in China

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 Market

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. http://www.winnebagoind.com/pdfs/11-YearData.pdf 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)
• Newmar

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.

Possibilities

• 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.

Proposed Product

Examples of successful products in this area: Volkswagen Vanagon camper van (discontinued in the U.S.; photo; floorplan).

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 (source: www.poptopheaven.com). 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.

Exterior Dimensions

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 much taller.

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").

Engine

Safety

Seating

Interior

Roof

Kitchen

Electrical System

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.

Climate control

• 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

Entertainment

Optional "Garage"

Examples: Visit www.fourwinds-rv.com and click on the "Fun Mover" product.

Awning

Examples: www.rvawningsonline.com.

Towing

Dealerships

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.

Rental

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.