Low Dollar and Interest Rates Driving RV Purchases in Alberta

By Ray Turchansky, Edmonton Journal

Two years ago, Albertans owned almost half of the existing recreational vehicles in the country.

The combination of a declining Canadian dollar, the province’s healthy economy and consistently low interest rates has convinced a rising percentage of them to shop at home for more.

“A lot of younger families are buying RVs, wages are going up, the oilfield’s doing well, the baby boomers are coming out,” said Nathan Peesker, sales manager with RV City in Morinville.

His dealership, which sells only Jayco, has an inventory of about 230 vehicles worth about $6 million.

“Our numbers are way up; there are lots of Internet shoppers. And the average owner keeps them only two to five years, because everything’s upgraded so much with electronics.

“I hear from a lot of customers that going to Mexico is getting dangerous, so they’re saying ‘we’ve got a beautiful country here, why don’t we explore it?’”

A 2012 study by Alberta Transportation showed that 42 per cent of RVs in Canada were owned by Albertans, including 285,475 travel trailers, 55,765 tent trailers and 25,363 motor homes. A study by Harris/Decima shows the typical RVer is 48, a year younger than six years ago.

Sales were up about 30 per cent at a recent Edmonton RV show, according to manager Dan Merkowsky, who is also executive vice-president of the Recreation Vehicle Dealers Association of Alberta. “We’re probably going to exceed 21,000 new units in Alberta this year. We’re No. 1 in Canada for the third year in a row.”

Show customers took advantage of a 10 per cent difference in the dollar, which becomes significant on a $40,000 purchase.

“You can put a lot of gas in it with the saving from buying in Canada,” said Merkowsky.

Interest rates also changed the landscape, as one bank was offering buyers loans at 2.99 per cent during shows in Edmonton and Calgary.

“A year or two ago we’d see people walk in with a pocketful of cash and buy a unit outright, but now with the rates being so low they’re more apt to finance versus putting cash on it,” said Merkowsky.

Loans are paid off in an average of 12 years, but some are as long as 20.

“The banks are all pretty active with the RV industry this year. We had two banks with offices last year and five banks with offices this year. Somebody at the top has figured out the RV industry is pretty secure to get involved in, and their rates are very competitive, and approvals were a lot easier this year than other years.”

According to the Harris/Decima study, the Canadian RV industry incorporates 98,800 jobs and an economic impact of $14.5 billion annually. There are about 100 dealerships in Alberta.

“What we’re seeing in Alberta is a dealer having more locations,” Merkowsky says. “Where they used to have one in Edmonton and one in Calgary, now they also have one in Red Deer, Grande Prairie, Lloydminster and Okotoks; their sense is people won’t drive halfway across the province to look at something, dealers have to be closer to them or they lose the business. But the trend in the States, big time, is three or four big dealers have bought 16 or 17 smaller dealerships out.”

The Alberta dealers typically attend a September buyers’ show in Indiana or a December show in Louisville and take delivery soon afterward.

“GE Capital or somebody finances those, so dealers are paying probably seven per cent interest,” Merkowsky says. “Finance people carry them for one year and after that the dealers have to pay them out. It’s not a cheap venture. But they’ll flip a lot in a year.

“I drive between here and Calgary all the time and in early August those lots are empty and I think ‘boy we’ve had a bang up year,’ and then I hit the road the first week of October and all the lots are packed, the 2014 stuff coming in ahead of time. They sit until the spring, and away they go again.”

He said bigger firms like Trail Blazer and RV City each have more than 100 vehicles on their lot, worth more than $5 million, ranging from $15,000 at the entry level to big buses worth $400,000 each, with the middle price about $30,000.

It can be pricey but the lifestyle is attractive. It brought retired senior Bill Kump from Baptiste Lake to the Edmonton show earlier this month.

“We live at a lake so we never went anywhere. Now we have time, we can start moving around and see a little bit more, rather than staying at home all the time. We haven’t seen any of Canada yet.”

Originally published at Edmonton Journal.