Turbulent Times of Motorhome & Caravan Sales

I have already looked at the UK staycation market in my Hi-di-hi Campers blog, off the back of this I was asked to look into the sales of touring caravans and motorhomes. One of my colleagues recently spoke to someone in the industry, and explained they were experiencing a decline in the number of sales.

How big is the UK caravan industry?

  • Each year it generates around £6bn to the UK economy. (This includes revenue from sales of products, related services and holiday bookings)
  • Employs around 115,000 people
  • 1.5 million people regularly take touring caravan/motorhome holidays
  • The Caravan Club has 1 million members (around 80,000 live in Wales)
  • The Camping and Caravan Club has over half million members

The staycation market is increasing in popularity, but touring caravan and motorhome registration statistics demonstrate this isn’t the case when purchasing said vehicles to staycation in. The UK motorhome market experienced growth year on year up until 2008, after which the economic climate took a turn for the worse and figures reveal that motorhome sales were also affected.

One way to see how the industry has reacted to the fall in sales is to review their advertising revenue. In total I reviewed the advertising spends for four caravan/motorhome dealers in Wales, the amount they spent on advertising per annum somewhat varied from £3000 to £730,000. It’s typical to see advertising spends reduce when the market shrinks. However it’s essential to increase your market share when the market is shrinking, in order to even stand still. To increase your market share you need to take if off someone else, the only way to do that is to out promote your competition.

Unfortunately their financial information isn’t available on the systems I use, so I can’t see the impact of the decline in sales against their turnover.

We have already established the market for new recreational vehicles declined in 2011. So, many dealers focused on the used market, one dealer indicated that small and medium vehicles under £27k sold extremely well. Sales of used touring caravans were reported to be better than sales of new caravans, but this didn’t instil much confidence for the retailers.

The sales of new and used holiday homes mirror the same decline in sales as motorhomes and caravans. One area of this industry that bucks the trend is park homes. Production of park homes increased by 23% between July and September 2011, compared to the same period in 2010. This could be down to the rising costs of mortgaging and running a bricks and mortar property.

In most of the reports I analysed they simply put the reduced sales down to the turbulent economy. Yes some of the population are experiencing financial hardship, but it seems like an easy label to apply to the shrinking market.

Here are some reasons why I think we aren’t buying caravans and motorhomes:

  • Fluctuating petrol prices, petrol is 30p per litre more than it was in 2008 and diesel has increased by 32p per litre.
  • Some consumers are trading down their cars for smaller more economical cars, which may not have the ability to tow a caravan.
  • New build houses offer fewer parking spaces, many house builders stipulate you can’t park recreational vehicles on your drive, there are storage facilities around the country but are an additional expense.
  • In times of austerity consumers want to feel as though they have had a ‘bargain’, but dealers don’t have the margins to discount the motorhomes/caravans that consumers are so used to seeing on the high street with other goods.

There are some positives though:

  • 2011 was the first year that diesel car sales overtook petrol sales.
  • 35% of cars sold in 2011 averaged between 55-70 mpg
  • Touring caravan manufactures are making lighter caravans, aimed exclusively of small car owners.
  • The Camping & Caravanning Club has reported a huge rise in the number bookings for its European Winter Rallies; almost 61% more getting involved this winter than last.

Fortunately the proposed intention of adding 20% VAT onto holiday and caravan sales from the 1st of October has been reduced to 5%. If they had gone ahead with the initial 20% VAT then the impact on the industry would have been disastrous. HM Revenue & Customs estimated that if they did implement the 20% VAT, the demand for caravan and holiday homes could have decreased by 33%.

The market has experienced some challenging times, if the VAT is introduced then it looks like it will continue. On the positive side, 83% of the Camping & Caravanning Club members are 46+, and 46% of the Welsh population are 45+. If you have read my ‘Why are marketers stepping over pounds to pick up pennies’ blog, you will already know this demographic is the most lucrative demographic to target. Not only do they have more disposable income but more time to spend it, and I’m guessing more time to holiday in their new caravan/motorhome.

Please leave a comment below or get in touch with me directly, Jodi.stuart@realradio.co.uk or @realradiojodi

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