Monaco Coach’s Rise Largely Fueled by Diesel Class A Motorhomes
Ascending to the top of the diesel-pusher Class A market, with 25.5% of diesel sales in 2004, wasn’t something that just happened. It was the result of bringing a team of executives together who recognized diesel’s potential, according to the company’s senior management.
When Chairman and CEO Kay Toolson “and the rest of us came on board in 1987 and 1988, we adapted a diesel emphasis, and basically dissected that market at multiple price points,” said Monaco President John Nepute.
That diesel motorhomes have simultaneously captured nearly 50% of the Class A market – the sector represented 46.5% in 2004 – comes as no surprise to Nepute. The differences between gas- and diesel-powered motorhomes have been shrinking, he said.
“I’ve been predicting for two years that the industry will get to 50%,” Nepute said. “If you look at the carrying capacities of gas and diesel Class A’s, particularly with slideouts, diesels are a more natural platform on which to build a Class A product. They are just heavier duty.”
Nepute pointed out that the popularity of diesel pushers emerged as gas chassis prices increased and less-expensive diesel transmissions became available.
While putting greater emphasis on diesel motorhomes, a portion of Monaco’s growth since the mid-’90s has been through acquisitions, both in the motorhome and towable segments.
In 1996, Monaco acquired Holiday Rambler Corp. from Harley-Davidson Motor Co. “We had not built any gas products for a number of years, and Holiday had several popular gas models, and they were a long-term towable manufacturer,” Nepute said.
Acquiring Oregon-based SMC Corp. in 2001 with its Beaver and Safari brands solidified Monaco’s diesel lineup. “We were looking for a Class A acquisition that didn’t overlap with what we had with the Monaco and Holiday brands,” Nepute said. “Beaver and Safari are both niche products that appeal to different buyers.”
Expanding on the towable segment that Monaco entered with Holiday Rambler, the company designed the McKenzie towables brand in the late 1990s. “We had towable capacity and we were doing the Holiday Rambler towables, so we started to go after the towable market more aggressively, although when we did the SMC acquisition, we got diverted a little bit.”
Monaco also acquired Royale Coach Inc., a converter of ultrahigh-end Prevost buses, in the early 1990s. These custom-built motorcoaches, with retail prices in the $1-(million) to $1.3-million range, are sold exclusively through Buddy Gregg Motor Homes, a luxury high-end dealer with stores in Florida, Tennessee and Texas. “Royale Coach is almost like an R&D facility,” Nepute said. “At that price point, you can look at using different materials and technology. Some Royale Coaches’ components and interior looks have been passed down to other lines.”
Nepute said it has always been the company’s goal for its brands to have identities separate from each other to appeal to specific market segments. “From our perspective,” he said, “we’ve done a good job of keeping the Monaco brand as an upper-end brand and the Holiday Rambler line as a little bit more bread and butter.”
Many of Monaco’s diesel products are built on the company’s proprietary Roadmaster chassis, which in 2004 had a 25.3% share of the nation’s total diesel chassis market, ranking the company second overall. “We are migrating SMC over to Roadmaster chassis, but they are sort of hybrids right now,” Nepute said.
The Roadmaster was among the first production chassis made specifically for a motorhome, according to Nepute. Consequently, Monaco not only competes with other RV manufacturers with regard to the motorhome “box,” but also the chassis. “Traditionally there is competition for innovations with what people are doing with the box that sits on the chassis,” Nepute said. “But, obviously, we also compete against the chassis that box manufacturers can buy from Freightliner, Spartan or Workhorse.”
Pat Carroll, vice president of product development, said Monaco sees growth coming in the lower end of the diesel motorhome market as well as in lower-priced travel trailers and fifth-wheels.
“We’ve always been very good at the mid- and high-line diesel business, but overall our development teams right now are working on the lower end,” Carroll said. “We are trying to get people to know Monaco not only as a luxury high-end RV company but one that makes recreational vehicles for all people at all price points.”
The RV builder may be making progress toward that because Monaco recently appeared on Fortune magazine’s list of “America’s Most Admired Companies.” Monaco also received the Recreational Vehicle Dealers Association (RVDA) “Quality Circle Award” for the second consecutive year.