Hazy days at Lazy Days RV

Is a bailout required?

StPetes Times today... click here

We are at Lazy Days - Crown Club  area - right now.  It's rather quiet around here, far less hustle and bustle than typical for the late fall season, though the luxury coach service bays are still full with folks like ourselves getting work done.  The sites set aside for delivery of new RVs are noticeably empty, though.  Only a few high end deliveries under way.  LD is going to have to get a lot leaner to survive, but they have such a huge establishment the fixed costs have to be astronomical.

We also noticed that the hors d'oeuvres n the Crown Club were less lavish than on previous visits and the offering of top shelf liquor brands noticeably reduced.

Perhaps the end of an era????

    In reading a posting on a string that I added a comment earlier today, an article in today's St Pete's Times, one of the 2 Tampa daily's came to mind.  It stated that Lazyday's sales have dropped significantly since 2004, to the point that they are trying to renegotiate some long term debt put in place when the dealership changed hands in 2004.  If I recall the article, they sell around 12% of all Class A RV's sold in the US, and they are working hard to make a profit.
    How the mighty have fallen, hope it soon settles down.

If finance companies end up with LD because the investor group fails to pay up, you will see only Cracker Barrel on the largest piece of RV real estate in the USA. If Mr Wallace stills  owns the  property then he will  have to do something  fast to protect his interests.Venture Capitalists are vultures when things get rough and things are rough!

I doubt that CW can survive in this location without a viable RV dealership on site.

My family is being offered deals from Factories and Banks but when we didn't get shed of enough land before the bust we are helpless  to be anything but bystanders.

God Bless The USA.

As I mentioned, we are at Lazy Days right now. We know quite a few people here, management and staff, and have chatted some of them.  I would call the mood subdued but optimistic. LD's market share has actually gone up, probably because other dealers have already closed their doors, but the pie is so much smaller (Class A sales down 50% nationwide) that a larger share is still a low sales volume. The winter season sales are picking up, but not at the rate enjoyed in previous years.  But we've met a couple of people in the Crown Club who are picking up new rigs (both American Coaches), so there are still sales happening. Some sales people are being brought back onboard for the winter season too, so the expectation is that sales will pick up a bit.

The main service department has shifted to flat rate rather than hourly pay for the techs, in an attempt to get better productivity and constrain costs. I'm told the Crown Club service area will also change to flat rate by the end of the year, but that did not come from an official source. As of today it is still hourly.

So I wouldn't write LD off yet. It is going to be a real struggle for them in this new market environment, but they feel they can survive.  I hope so - whether you love 'em or hate 'em, LD is an icon of the RV industry.  8)

LD Finance Officer said he held off the overdue interest only payment(millions) to keep it for necessary day to day operations. Wall Street experts say the loans exceeded 100 million as of this date. The original sale from the Wallace family was about 200 million.

Ron & I and other senior gentlemen remember going in to the local bank's and had to have 100  percent collateral  to get a loan. We have come too far!

    Having been in the business of financing the Automotive industry for 40 years until I retired last spring, I agree with you wholeheartedly Harley.  It never got as bad here in Canada, but we are all paying the prie today for those indescretions.  I recall vividly when we first allowed Retail Loans to be amortized over 60 months, from a previous maximum of 48, and every deal required equity of between 10% to 25%.  Now in Canada 84  months was the norm, and we rutinely were financing 140% to 175% of true cost because people were upside down with their trades.  If you extend that to the Real Estate or RV markets, it quickly becomes the problem that now consumes the world.

We were hanging around Lazy Days all week while the coach was getting an ailing transfer switch replaced and some odds and ends taken care of. Quite a few of the management and staff know of our involvement in the RV Forum and most are willing to talk quite freely about the situation in the RV sales business and LD.

As I reported previously, the service area is swamped with work, as is typical for this time of year (returning snowbirds, etc). Techs and service advisers had been laid off during the summer, fewer people are trying to cope with the work, making things slower than usual. Some techs are being hired back and another service adviser came onboard a couple weeks ago.

Sales are slow but slightly improved, again the result of the winter season in Florida. Nowhere near like typical years, but enough to justify a few more sales staff as well. High end coaches still sell - we had lunch with a guy looking to swap his 07 Beaver Marquis for an 09American Heritage and cocktails with a couple looking to see what the newest Tiffin coaches will have as upgrades to see if they want to trade their early 08 Allegro Bus.  Most people, though, are repairing their current rig and taking a wait and see attitude.

Loans are much harder to get if your Beacon (FICO) credit score is under around 700 (out of 850) and it is no longer possible to get 130-150% of the book value of a coach, as it was just last year. As your score goes down, the amount that can be borrowed drops quickly and with a Beacon score in the 500's you can forget about any loan at all. 550 isn't terribly bad credit, but no lender is gambling in the current economy. Bottom line is that easy credit is gone.

On pricing I was told that deals are much tighter than in the past. Last year they could afford to make an extra steep discount to win a sale, maybe netting just a few hundred dollars on a deal after commissions and sales overhead, because the volume was high and a sale often generated more sales in the future (word of mouth advertising or upgrades). With the much lower volume, every sale has to generate some profit in order to keep the doors open. The bottom line is that the initial offers may be better than in the past, but the bottom line after negotiation may actually be higher than the strongest negotiator could have gotten in the past. Salesmen don't bother to bring no-profit deals to their managers cause they are not going to fly.  So it is easier to get 25% or so off the MSRP, but harder to get more. Lazy Days is actually advertising up to 33% off on some models, though.

Sure hope Lazy Days makes it.  IMHO they are a good dealer.

I never question any thing Gary say's. I will add that there are dealer's gasping for air with floor plans eating them alive and willing to get shed of units that are having BIRTHDAY'S!  Factories if possible are issuing rebates on top of invoice(or lower) sales to assist in selling these units. This the greatest buyers market I have ever witnessed in any type of venture. Problem is Buyers with $$$ are waiting for the  real Bottom. Good Luck Waiting

HAPPY THANKS GIVING!

I never question any thing Gary say's.

Click to expand...

You should. My halo is tarnished and  I haven't ever walked on water!   

Gary:

As you may know we called Brent and found LD no where near as competitive as in the past. As we discussed last month it is in the value they are trying to put on trades.

Their first pass at us was trying to circle the Tradewinds.

    Jeff, that is consistent of when things tighten up in the Automotive/RV industry.  If goes with two obvious signs tings are happening.  The first is that they don't want to tie up cash in a trade, which may or may not be elegible for floor plan financing.  If not, then the dealership has to tie up precious Operating credit lines, with normal "margin" requirements, to buy the trade, because they have to pay off the new unit once it is sold.  The other, and this may be what happening now, with the used market in such an uproar, they want to steal the trade at a price that they know will result in a quick turn over, or maybe a sale to a wholesaler, so that they don't have to sit on the trade.  As said, once the new unit is delivered, they must pay off the loan.  Often the math is Trading difference less pay out must be greater than pay out, or no sale.  In tough times I've seen dealers routinely walk on good deals because they didn't have a flip for the trade, and didn't want to or couldn't use Operating to finance it.

Yeah, we happened to be at LD when you called Brent and saw him that evening and the next day as well. Heard the story.

It appears that several dealers are trying to sell used coaches on ebay with very little luck.  I have been watching auctions for late model class A coaches for several weeks and I have only seen two sell.  One was last week.  A 2007 Hurricane 31H, 11,900 miles, sold for $36,115.  Although that is an entry-level coach, the selling price appears to be very low.

I have been considering upgrading, but I have an older class C that I need to sell or trade.  I don't need two.

Delbert

It's only a buyers market if you don't have a trade or resale of your own. What you save on the buying side, you may well lose on your own rig.

Ebay has been a popular sales venue for dealers for a year or two now. Actual sales are down, though, just like everywhere else in the RV market.