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RV: this summer's new work from home essential

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Thor Industries CEO & President Bob Martin joins Yahoo Finance’s Alexis Christoforous and Brian Sozzi to discuss the company’s latest earnings report, and summer 2020 RV outlook.

Video Transcript

ALEXIS CHRISTOFOROUS: You can say the RV industry is having its moment. The world's biggest RV maker, Thor Industries, posted a blowout earnings report yesterday, beating on both revenue and earnings. And with the coronavirus pandemic still weighing on all of our summer plans, consumers are looking to the RV market for a new way to travel.

Joining us now is Thor Industries CEO and President. Bob Martin joining us from his home in Indiana. Hey, Bob. That's a pretty sweet Mercedes-Benz RV you've got there behind you. I have to think that's your top of the line model.

Tell us what things are looking like here as we head into this summer. What kind of an increase have you seen in demand for RVs?

BOB MARTIN: You know, it really started about four to five weeks ago as more states started to open, and we started to see a real trend for our smaller units, our smaller travel trailers, that price point around $15,000, less, to $30,000.

And then every week it got a little bit stronger with more of the openings and people showing up to our dealers' lots, and the trend got a little higher every week to where this Mercedes-Benz chassis, Delano Class C from Thor Motor Coach is really, you know, mid $150,000-- so it's one of our midpriced lines. We have motor homes that go up to $800,000 from our Entegra line. Airstream trailers, you know, they're anywhere from $70,000 to $100,000. But Airstream in May had their best month ever in the history since we've owned the company since 1980. So it's really all over the board.

BRIAN SOZZI: Bob, that looks like a serious machine behind you. And how is the Wi-Fi in that? because you made it a point to note on your earnings call that it might be used for working from home this summer. A lot of people might go into the motor-home industry because they can travel around, get their work done since they're not taking vacations via airplane.

BOB MARTIN: Yeah, most of the units have-- we have different suppliers to supply the antennas, but the antennas now have 4G Wi-Fi in them, and so people can work virtually anywhere. You know, whether it's Zoom calls-- the world has changed, but you can-- there's a great workspace in this at a dinette, and many even smaller than this, they have just a small table we'll put in just for the laptop.

ALEXIS CHRISTOFOROUS: Bob, are you seeing a lot of new customers coming into the space, people who would never have thought of owning an RV coming to you now and saying we're interested in this?

BOB MARTIN: Yes. I've got stories from all over the nation, but the typical-- you'd have a couple from-- they have a home up north, a home maybe in Florida, and they didn't want to fly home. So they were coming into our dealerships and buying a unit just like this.

And one of the other benefits to having an RV is you can travel with your pet. And so many people didn't like to fly with their pet. And now, you know, you can literally go from Florida all the way to Minnesota. You have your refrigerator full of your food. You have your own bathroom, your own sink, shower. You can sleep in it. All you really have to stop for is gas.

And so we're seeing this trend, and it's more and more new buyers than-- when they come in without a trade-in, they're also a younger demographic as well. So it's been some great things that we've seen since this has all started.

BRIAN SOZZI: Bob, how would you grade-- what grade would you put on demand over the past four weeks?

BOB MARTIN: The last four weeks has been an A plus. Just the retail demand has picked up tremendously over the last four weeks. So it's hitting a point where dealers-- we started this year, many dealers were up double digits January, February. And then when the pandemic hit March, everybody shut down for four to six weeks, and it came back quickly. And so demand has built over the last four weeks to just a frenzy to where right now we're just trying to get dealers their inventory.

ALEXIS CHRISTOFOROUS: Now I don't know if your dealerships are open for in-person viewing or, you know, riding of these things. People want to check out their RV before they buy it. It's a big purchase. Are you selling them online? Are people actually able to gain access to the physical RV?

BOB MARTIN: Yes, so they started off-- you know, many were online when they were, you know, [INAUDIBLE] the state shut-ins. But now as states have opened up, they've got-- it's very controlled, depending on the state, but there are some where they'll set an appointment. They'll wait in their car until their appointment is up, and they'll social distance with the dealership. And it's just a very safe way to go in and, you know, look at the RV one on one. And so right now, they've really figured out how to do it in a controlled fashion.

ALEXIS CHRISTOFOROUS: You know, talk to me about resale value for these RVs because I've heard-- you know, they always say, you know, once you drive a car off the lot, it already depreciates. What happens with an RV? This is a big purchase. What's the secondary market look like, and how much of their value do they lose on the secondary market?

BOB MARTIN: It is similar to, you know, a car. When you drive, you know, an RV off the lot, there is-- you know, it's a depreciating asset, you know, maybe even a little bit more than a car. But it depends on the market itself. It changes every year, every month. And we look at auction sites. We look at the used market.

And right now when this started, the used market started before even some of the entry level new. So right now, trade-in values are actually higher because dealers need the used inventory. And so it really always depends on the market conditions. So right now, for those customers that have a used unit, their value is going to be higher when they go to trade in.

BRIAN SOZZI: Bob, real quickly before we let you go, you're a global company. A pretty important acquisition from you within the past year. What are you seeing in some of the harder-hit COVID-19 areas overseas in Europe? Has demand started to come back a little bit?

BOB MARTIN: Yes. You know, probably Italy was the toughest. We do have a factory in Italy, and that one had an extended shutdown, but it is up and running now and very much in a controlled fashion.

Germany is the strongest market of Europe. The German demand, even while we were shut down, customers were calling in trying to find out when they could get to their caravan because it's very much part of the lifestyle over there, and they really wanted to get out and travel. Now, it's different because they'll have to stay within their country for a while, but people are promoting, you know, discover more of your own country rather than going across borders.

So UK is probably harder hit than most, and we're looking to start up production there. But eight of our nine factories are up and producing, and demand has been actually very good. So we're happy with both sides of the water.

ALEXIS CHRISTOFOROUS: All right, Bob Martin, CEO of Thor Industries, thanks for being with us. Enjoy your drive in that Mercedes Delano.

BOB MARTIN: Thank you very much.