Luxury RVs in China Expecting Boom
It seems almost every month or year there are analysts predicting the next economic boom in China. One of the booms that has been continually predicted is luxury RVs in China. In June 2012, the Financial Post reported “China driving toward RV market boom” but two years later there doesn’t seem to be any market boom. We wanted to dig a little deeper to find out more about this niche market and whether or not it is currently experiencing a boom or if it is poised to take off.
Current Market of Luxury RVs in China
According to RV Business, “Winnebago Industries Inc., based in Forest City, Iowa, began working in 2011 with dealers in Beijing and several other cities, selling several models. Thor Industries Inc., the Elkhart, Ind.-based owner of the Airstream brand, started selling its distinctive silver camping trailers from a Beijing dealership in March 2013.”
Bloomberg said, “Germany’s Dethleffs GmbH & Co. started selling imported RVs and caravan trailers in 2013 from showrooms in several Chinese cities. The RVs can sleep six, run an average of 1.5 million yuan, said Surana Chen, president of its Chinese operations. “High-end RVs are new symbols of status and success, like yachts and private jets,” said Chen.”
According to The Trentonian, “Great Wall Motor Co., China’s biggest SUV maker, and pick-up truck maker Xinkai Automobile Group, also have started making motor homes and touring coaches that can be substantially cheaper than the imports. Great Wall’s most expensive model costs 508,000 yuan, according to auto website Cheshi.com.”
Currently, there are both domestic and foreign dealers in the market, all hoping to cash in on the expected boom but when will this boom happen? According to Reuters, “The RV China Association expects sales to increase 40 percent between 2012 and 2015 to close to 4,000.” 4,000 units is a far cry from an economic boom even if units are selling at $30,000 – 50,000 on average. So, what is all the fuss about? Let’s take a look at the future of luxury RVs in China.
Future Market of Luxury RVs in China
Researchers at 21RV.com estimate the number of motor homes in China will surge from about 9,000 to 800,000 in the 10 years to 2022. In the 10 year period that started in 2012, 21RV expects the market to surge to 800,000 luxury RVs in China. Where is this surge supposed to come from over the next 8 years? According to Reuters, the market is barely selling 4,000 RVs per year. 8 times 4,000 only equals 32,000 RVs, so where are the other 768,000 RVs being sold? Even if the market doubles every year (highly unlikely) for the next 8 years, it will be hard to reach 800,000 RVs on the road.
According to Reuters, “Bill Liu (a motor home exporter) predicts RV sales in China will skyrocket to 500,000 annually in 20 years because, with China’s first generation of modern entrepreneurs getting set to retire, “for the first time in Chinese history you have people with money and time.”
So the expected boom is based on entrepreneurs and wealthy upper and middle class citizens retiring. This is a fair prediction but with the social and economic outlook in China, many wealthy retirees may not be interested in retiring in China. The growing trend of Chinese citizens emigrating abroad for retirement must be factored into any prediction in regards to wealthy citizens retiring.
Along with the growing trend to retire abroad, there are other problems holding the market back. According to Bloomberg, “One potential brake on sales is driving restrictions. In some provinces, a bus-driver’s license — among the toughest permits to get — is required to pilot an RV, while in others a standard passenger-car license is sufficient, according to Beijing Centech. And in some areas, it’s illegal to tow a camping caravan trailer, the RV dealer said. A further limiting factor is a lack of campgrounds. The country has just 150 designated areas for camping, versus 16,500 in the U.S., according to 21RV.”
Final Outlook on Luxury RVs in China
The final outlook on luxury RVs in China is a tossup. On one hand there is an expected boom with legitimate facts about retirement and spending, but on the other hand there are counter facts that support a different story. One story is everyone is retiring and traveling the “beautiful” Chinese countryside with their families and the luxury RV market is booming. The other story is much darker and currently being seen throughout China. It is the story of rich citizens fleeing and retiring overseas or families driving for miles to find one of the 150 designated areas for camping.
There are two possible outcomes but entering the market does not have to be make it or break it. Many individuals, like Guenter, have been doing very well in this niche market. Guenter is the president and founder of Motor Home China, an organization that brings together RV enthusiasts and dealerships. Over the last few years Guenter and his team have been building awareness and trust within the RV circles throughout China. There are always opportunities for passionate people in every industry.