SIC 3716

This category covers establishments primarily engaged in manufacturing self-contained motor homes on purchased chassis. Establishments engaged in manufacturing self-contained motor homes on chassis manufactured in the same establishment are classified in SIC 3711: Motor Vehicles and Passenger Car Bodies. Establishments primarily engaged in manufacturing mobile homes are classified in SIC 2451: Mobile Homes; and those manufacturing travel trailers and pickup campers are classified in SIC 3792: Travel Trailers and Campers. Establishments primarily engaged in van conversion on a custom basis are classified in SIC 7532: Top, Body, and Upholstery Repair Shops and Paint Shops.

NAICS Code(s)

336213 (Motor Home Manufacturing)

Industry Snapshot

Going into the twenty-first century, the U.S. motor home industry was seeing some growth. Factors contributing to this were a good economy, the aging of the American population increasing the size of the industry's core market, and the prospect of younger Americans with more disposable income becoming motor home customers. As a result, shipments increased throughout the late 1990s, growing from $3.89 billion in 1997 to $5.31 billion in 1999. As the economy weakened in 2000, however, shipments began to fall, declining to $4.21 billion.

Organization and Structure

The recreational vehicle (RV) industry can be divided into two groups: towables, which include conventional and fifth-wheel travel trailers, folding camping trailers, and truck campers; and motorized vehicles, which include motor homes and van conversions. However, the only segment of the industry that is covered in this essay is motor homes that are built on purchased chassis. The overwhelming majority of motor homes sold in the United States are built on chassis that have been purchased from an outside manufacturer. The two key manufacturers of gasoline-powered chassis for motor homes are General Motors Corp. and Ford Motor Co.

Motor homes are classified as either Class A, B, or C models. Class A vehicles are probably what most people think of when they hear the term "motor home." It is a living unit entirely constructed on a bare, specially designed motor vehicle chassis, and the driver sits within the vehicle itself. Class A models have been the most popular type of motor home. In 1995 they represented about 62 percent of all motor homes shipped (and more in terms of the dollar value of shipments). Class B motor homes, also called van campers, are defined by the Recreational Vehicle Industry Association (RVIA) as "a panel-type truck to which the RV manufacturer adds any two of the following conveniences: sleeping, kitchen, and toilet facilities." Class B vehicles represented about 7 percent of 1995 shipments. Class C models are smaller than Class A, and the driver usually sits inside a separate cab; they accounted for about 31 percent of unit shipments in 1995.

The two largest manufacturers in the industry, Fleetwood Enterprises and Winnebago Industries Inc., held about 44 percent of the motor home market in 1995. Together, the 10 largest makers accounted for more than 85 percent of total industry sales.

Background and Development

According to one source, the first motor home in the United States was built to take tourists out West for the San Francisco Exposition of 1915. Although its promoters claimed that it had all the advantages of an ocean cruiser—with hot running water and electric lights—testimony confirming the comfort of the journey does not appear in any historical record. Wealthy industrialists, notably Henry Ford and Thomas Edison, were among the pioneers of the motor home industry; they built relatively luxurious caravans with amenities like leather swivel chairs and refrigerators. The well-to-do were imitated by the middle class, who bolted boxes to the backs of Model Ts and fastened a bed and dresser inside to create what was then called a "house car." American individualism soon made itself felt, and by the late 1920s one could see house cars that looked like log cabins, miniature mansions, and even airplanes.

The early motor home travelers stayed overnight at farms and ranches, but eventually large campgrounds were built that could hold more than 1,000 vehicles. The sites were often overcrowded and unsanitary, and a far cry from the outdoor life these early RV users sought. Driving the first professionally built motor homes was not much fun either. They were made with heavy materials that overtaxed the chassis and gave poor weight distribution. Insulation was poor and the vehicles were not suited to the roads of the time. Thus, until the 1960s, the towable trailer was the more popular form of RV.

In the mid-1950s some small companies began to build what might be called motorized trailers. While they represented a significant improvement, they were still overweight and underpowered. A few years later, however, Winnebago Industries began to introduce its innovative products, which became popular in the late 1960s and early 1970s. The company developed a special wall construction called Thermo-Panel that had the required structural strength and offered good insulation; at the same time, it was light enough to increase gas mileage and engine performance. Moreover, once Winnebago introduced assembly line production, it was able to make its motor homes a lot cheaper than the competition could.

Nevertheless, buying a motor home represented a major financial commitment—in 1994 the average price of a Class A motor home was more than $62,000. According to a survey conducted by the RVIA in 1993, about 69 percent of motor home purchasers had a gross income between $50,000 and $100,000 a year, while 59 percent had been in the same job or the same industry for 10 years or more. Hence, older, more financially secure Americans were the industry's key customers.

A notable trend in the industry was toward larger vehicles with more equipment. A corollary was the increasing popularity of slideouts—roll-out room extensions that allowed manufacturers to increase the size of floor plans. Although slideouts posed problems for campground and resort operators, consumers wanted them and, by the mid-1990s, slideouts held about 30 percent of the market.

In 1997 a joint promotional campaign was launched by recreational vehicle manufacturers, suppliers, dealers, and campgrounds promoting the lifestyle and experience of owning a recreational vehicle. Those efforts were rewarded in 1998 with the best year the industry had enjoyed in 20 years. Calendar year 1998 showed shipments of recreational vehicles totaling 292,700, an increase of 15 percent from 1997. The growth rate was equally shared by both industry sectors, with motor homes up 15 percent with 63,500 units and towables up 14.9 percent with 229,200 units. Type C mini-motor homes and conventional travel trailers had the largest increases, at 25.1 percent with 98,600 units and 25 percent with 17,000 units, respectively. Type A motor home shipments increased by 14.1 percent to 42,900 units. The best total in nearly 25 years was seen by folding camping trailers, at 9.9 percent and 63,300 units. The total for truck campers rose 4.9 percent with 10,800 units, and an all-time record was set for fifth-wheel travel trailers, with a 7 percent increase and 56,500 units shipped. The retail value of these shipments reached $8.4 billion.

Current Conditions

In the late 1990s industry participants were optimistic about the industry's long-term prospects. The essential economic ingredients appeared to be in place—expanding economy, low interest rates, and low unemployment—while demographic trends were on the industry's side. The prime buyers of motor homes were people 50 years of age or older, and this market was expanding with the aging of the U.S. population. At the same time, those between the ages of 30 and 49 were entering the RV market in significant numbers. While they tended to buy inexpensive towables, their purchases signaled that they liked the RV lifestyle and perhaps would be willing to trade up to a motor home when they had more leisure time and more money. Some also believed that the growing preference of consumers for "car substitutes" like light trucks and sport utility vehicles would make the prospect of tooling around in a 40-foot Class A motor home less formidable.

David J. Humphreys, president of the Recreation Vehicle Industry Association (RVIA), has stated that the industry was benefiting from the baby boomers entering the recreational vehicle market in the late 1990s. The customer profile was no longer only that of the over-55 "empty nester," but also of younger families with more disposable income. According to a research study conducted by the University of Michigan in 1999, one in four households headed by 35- to 54-year-olds indicated that they intended to purchase a recreational vehicle sometime in the future.

The value of industry shipments reached a record high of $5.31 billion in 1999. In 2000, however, when the U.S. economy began to weaken, shipments fell to $4.21 billion. The cost of materials declined from $3.69 billion in 1999 to $2.93 billion in 2000. Over the same time period, employment fell from 20,391 to 18,160.

Industry Leaders

Fleetwood Enterprises is the largest U.S. motor home manufacturer, with about 28 percent of the market. The company is headquartered in Riverside, California, and employs nearly 21,000 people throughout the United States and Canada. Fleetwood also manufactures factory-built homes and has become a leader in that industry, too.

Winnebago Industries, Inc., headquartered in Forest City, Iowa, is the industry's second-largest company. Winnebago celebrated its fortieth year in the industry in 1998. Net revenues for fiscal year 1998 were $525 million. The brand name "Winnebago" is often used interchangeably with the term "motor home" in the vocabulary of many Americans.

Founded in 1958 by John K. Hanson, who died in 1996 at the age of 83, Winnebago posted increasingly strong sales and profits in the late 1960s and early 1970s. Afterward, however, recessions, gas shortages, and, some say, poor management cost the company market share and hurt profitability. Between 1989 and 1992 the company lost money each year. In fiscal 1993, however, Winnebago benefited from a new line of motor homes that was well received, as well as reduced costs and greater automation of production. These factors, coupled with the improved economy and low interest rates, continued to support the company's profitable performance.

America and the World

European motor home markets differ substantially from those in the United States. While European RVs can be as sophisticated as American models, their campgrounds lag notably behind. The campgrounds often lack the amenities of U.S. sites, such as dumping stations and full hookups. European RVs tend to be smaller because of higher gasoline prices and licensing rules that limit motor homes to about 6,000 pounds. Certainly Europe offers attractive demographics, with an affluent workforce that gets four to six weeks of vacation each year. Thus far, however, the experience of U.S. motor home makers in Europe has been less than overwhelming. Indeed, the industry's participation in European markets took a step back in 1996 when Fleetwood sold its German subsidiary, Niesmann and Bischoff.

U.S. makers have made some inroads into the Japanese market. The focus there has been on Class B models because Japanese motorists can operate them with regular driver licenses. Since Japanese roads tend to be narrower, compact motor homes that can also be used for everyday driving are popular. American makers have modified their designs for the special needs of the Japanese market. For instance, kitchen sinks are made one-foot deep so they can accommodate a rice cooker.

Research and Technology

As with many industries, the growth of the Internet is having an impact on the motor home industry. By 1997 significant numbers of manufacturers and dealers had created Web sites to advertise their product lines and supply customers with information. The Internet is particularly useful for motor home rentals. People from all over the world can now conveniently reserve vehicles online at a low cost to the dealer.

While the Internet is affecting marketing, new technology is changing manufacturing. Motor home producers are seeking to incorporate lightweight materials that are nonetheless strong and resilient. In some instances, aluminum is replacing rubber in roofs and fiberglass in sidewall paneling. Winnebago is using a combination of aluminum and steel to eliminate wood framework.

Moreover, manufacturers are investing more capital in the production process to make it less labor intensive. For example, Winnebago has moved to a flexible manufacturing system in its metal-stamping operations. As Ron Buckmeier, director of engineering, told RV Business, "There's some labor savings, but the real advantage is quality improvement and the variability to do mixedmodel manufacturing."

Further Reading

" '95 Adjusted Shipments Show Decline Over '94." RV Business, March 1996.

Fleetwood Enterprises, Inc. Web site, 1999. Available from .

Kurowski, Jeff. "Tokyo Show Targets New RVers with U.S., International Imports." RV Business, May 1996.

"November Shipments Impacted by Lagging Conversion Market." RV Business, February 1997.

"Research Reveals Larger, Younger RV Market." RVIA Web Site, 1999. Available from .

Sullaway, John. "Creating Coaches for the Physically Challenged." RV Business, June 1996.

Thompson, John. "Selling in Cyberspace." RV Business, February 1997.

United States Census Bureau. "Statistics for Industries and Industry Groups: 2000." Annual Survey of Manufacturers. February 2002. Available from .

Winnebago Industries Annual Report, 1999. Available from .

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