News

Gas prices, economic slump impacts RV sales

by EVAN McLEAN

Staff writer



If there’s one thing that brings home the high cost of gasoline, it’s filling up a recreational vehicle before hitting the road while getting less than a double-digit mile-per-gallon average.

Just ask Joe Valerio, of Sequim, who decided to sell his 23-foot 2003 Ford Kodiak. The rig’s 35-gallon tank would cost $151.90 to fill up with regular unleaded at the Sequim Safeway as of July 28.

“It’s such a great RV that I think about keeping it all the time,” he said, sitting in the driver’s seat, parked across from Coneheads on West Washington Street in Sequim.

“Gas prices have really had an effect on my willingness to take it out whenever I want to but there are still people out there looking for RVs.”

Recreational vehicle sales are considered one of the nation’s larger economic thermometers and significantly dropping sales through 2008 indicate the U.S. economy may have more than the sniffles.

And the economic aches are being felt on the North Olympic Peninsula. But other trends like RV rentals and public park attendance hint at a steady tourism economy in the area.

RV manufacturers across the country have folded or are laying off employees, which has a dramatic effect on RV sellers such as Olympic RV, even more so than a market suddenly flooded with privately sold used RVs.

Used RVs with “For Sale” signs are being lined up in vacant lots in Sequim, such as where Valerio parks his.

They are parked not for recreation but for cash for the owner. Valerio said he is likely to take the cash from the sale and combine it with a Jeep Cherokee trade-in to get an economy car.

Harry Mitchell, co-owner of Olympic RV, said the long-standing RV retailer at 22 Gilbert Road in Carlsborg is going used in response to the changing industry.

“Despite rumors, we are not going out of business just yet,” he said. “We are liquidating our inventory and we will no longer be selling new RVs, but that does not mean the end.”

Mitchell said a handful of RV manufacturers have closed in recent months, including Western Recreation from Yakima.

“When Western Recreation closed, it left us in a bit of a bind,” Mitchell said. “Washington has rules about new vehicles needing a warranty and banks will not finance an RV without a warranty, so we were forced to label those vehicles as used without a parent company to back their rigs.”

While smaller manufacturers close down, even the heavyweights are feeling the strains of the soft economy.

Fleetwood Motorhomes, of Riverside, Calif., reported a 13-percent decline in sales in April, at a time it was beginning to lay off about 20 percent of its workforce. Winnebago Industries Inc., of Forest City, Iowa, reported a 2008 reduction in sales of 40 percent compared to 2007. The company has cut its workforce by 830 employees as of late June.

“Winnebago is really a national economy indicator,” Mitchell said. “When discretionary spending goes, so does that section of the economy, which has a huge impact on the workforce nationally.”

Spending on big-ticket items has gone down across the board and atop the water.

Greg Casad, with Port Angeles Power Equipment, said he has seen a decrease in purchases of new boats.

“Almost everyone that is dealing with us locally is trading in their boats or getting the boats they have repaired, rather than buying new ones,” Casad said. “Even the smaller boats, which are popular this time of year, are not selling well compared to 2007.”

While customers are buying used or investing in the equipment they already have, many others are renting.

The Recreational Vehicle Industry Association reported RV rental agencies had an increase in bookings in 2008. And amid rising gas prices, the association reports overall savings through RV usage due to the rising costs of airfare and hotels.

Mark Lockwood, of Castle Rock, is an example of someone staying relatively local, spending more on gas but less on rooms and recreation.

He takes his family to the Dungeness Recreation Area in his 12-foot Lance travel trailer every year.

“This area is close enough for us to still make trips even with the higher gas prices,” Lockwood said, sitting with his family around a fire pit at the Clallam County park. “It’s all about staying more local, rather than taking it on big trips.”

In fact, Clallam County parks with recreational vehicle camping sites and hook-ups are doing better than ever.

“This year is the first year we instituted site reservation in the Salt Creek and Dungeness parks and we have received highly favorable comments and an even higher use of the system,” said Clallam County Parks and Fair supervisor Bruce Giddens. “Everyone had been predicting terrible numbers, but we haven’t seen those yet as a result of the fuel cost situation. Really, we are seeing our highest numbers yet, especially in Salt Creek.”



National statistics from the Recreational Vehicle Industry Association show:

• 2006 as the apex year in sales with 390,500 units sold

• 2007 had a 9.5-percent decline in RV shipments from manufacturers

• 2008’s first-quarter shipments went down 11.8 percent from 2007

• 2009 is expected to be similar to 2008, eighth-best sales in past 25 years

• 2008 has 20-percent increase in RV rental bookings over 2007

• An average vacation for a family of four is cheaper in an RV than by other modes



Gas tax hiked

Motorists started feeling a new pain at the pump July 1 in the form of the last gas tax hike mandated by the 2005 Legislature.

Senate Bill 6103, which was signed by Gov. Chris Gregoire, increased the gas tax 3 cents a gallon in 2005 and in 2006. Then it increased the gas tax another 2 cents a gallon in 2007 with a final increase of 1.5 cents that started July 1, 2008.

The state gas tax is now 37.5 cents per gallon. When combined with the federal gas tax, the rate is 55.9 cents a gallon.

Washington state is now seventh in the nation for highest gas tax at nearly 56 cents per gallon. California is No. 1 at 74.9 cents, Connecticut is No. 2 at 70.8 cents, Illinois is No. 3 at 66.6, New York is No. 4 at 62.3, Michigan is No. 5 at 60.7 cents and Indiana is No. 6 at 56.9 cents.

The nationwide average for gas tax is 49.4 cents per gallon. Alaska has the lowest gas tax at 26.4 cents per gallon.

The state of Washington’s biennial transportation budget is supported by the fuel tax revenues as well as license, permit and fee revenues. To support the current, proposed biennial spending plan, legislators decided additional revenue was needed.

The 2005 bill passed the Senate with a vote of 26-22 and passed the House of Representatives with a vote of 54-43. To learn more about gas tax rates across the nation, visit the American Petroleum Institute at www.api.org. For more information on the Washington Legislature, visit www.leg.wa.gov/legislature.

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