The Local Caravan Industry
Anyone walking the halls and grounds of caravan shows over the last few years would be amazed at the depth and variety of vans for sale. The local RV industry is a major component of Australian manufacturing, with innumerable brands and impressively monstrous displays. For a long time, the Australian caravan industry appeared bulletproof.
But under the surface, a major change has been brewing, and in recent months, the industry has been rocked by a series of major business collapses. Over the last two years, Highline Caravan left the scene with little fanfare, and then we saw the Tango Caravans collapse, which, at the time, shocked the general public with what many saw as unscrupulous business practices that left buyers seriously out of pocket.
Late last year, the voluntary administration of Zone RV was a major development. While there might have been signs the business was in trouble, the extent of the $42m debt was a surprise. The liquidator managed to sell the business, but numerous customers had laid down significant deposits that vanished into thin air. Then, too, long-term and well-loved brands like Atlantic, Paramount and Bushmaster quietly left the scene as retirement and falling sales merged. New Age merged into the giant JB Group, and Bruder was offered a new life with New Age founder at the helm.
But the last few weeks have seen more brands in trouble in what's starting to look like a major correction for the industry. Melbourne-based Network RV, with house brands like VanCraft, Victory and Nextgen, entered administration with debts approaching $30m. Network RV also built the Australian-manufactured line for On The Move.
Great Aussie Caravans and Ourgen RV were added to the list of failures, but when Global RV Sales announced their departure from the scene, they took with them the iconic offroad brand Sunland and the innovative Chinese import X-Series.
Why is this Happening?
To understand what's happening now, we need to recognise a variety of seismic shifts converging on the manufacturing hubs at Campbellfield and Southern Queensland, which recently collided.
1. Oversupply. Over the past decade, we’ve consistently been told there are 150-200 local caravan builders and that there are too many. I’ve never been able to find even half that number, but it's fair to say there are a lot, and not all of them are master craftsmen or well-versed in business and the economy.
2. A Pandemic. Commentators have predicted a downturn in the caravan industry since the golden days of manufacturing during COVID, when the Australian population collectively lost its mind in a buying frenzy. Many builders invested heavily in expanding their output by moving into larger factories and purchasing significant machinery. The extra costs were huge, and when COVID buyers decided Bali was more attractive than emptying a cassette, many vans hit the second-hand market. Many builders are still paying the price for overcommitting during these golden days because turnover isn't covering the bills.
3 Poor Cash Flow. Caravan manufacturing is a business, and not all builders are business-oriented. They might make a great caravan, but if they don't understand cash flow, government legislation, market trends, and the world economy, they can't prepare for changes or set aside cash for market fluctuations.
4. Cost of Living. Average Aussies are doing it tough. Consecutive interest rate hikes hit many young families hard, and discretionary spending is falling. This isn't the same for everyone, of course, and the income gap continues to grow, but self-funded retirees and families with established mortgages suddenly found their budgets squeezed by rising living costs. "Cosi livi" even became word of the year in the Macquarie Dictionary in 2023!
5 Shifting Demographics. In years past, the grey nomad was a major buyer of caravans. This has shifted to a younger, more affluent group that demands the highest quality for extended travel. Many work remotely from the van, so they want ample room and amenities. The tradie family is facing mortgage pressure, and sales of family vans are declining. Companies like our Caravan of the Year winners, Mountain Trail and Kokoda, have plugged into this market, but many quality mid-range builders are struggling.
Online influencers have a significant impact on X-Gen buyers, and several builders told me they expect the best. This group would rather not buy a van at all than compromise on something less attractive. If they can't get what they want, they won't buy.
6 Trump's War Within days of the war in the Middle East, spikes in regional diesel prices altered long-range touring habits. Even short trips were postponed or abandoned. Visits to regional centres caused impacts on those regions. Diesel costs and availability caused uncertainty that showed in caravan sales figures almost immediately, and that has continued for months now. Many insiders are saying it's the worst time for caravan sales, and they blame the war.
7 High Costs of Manufacturing Caravan manufacturing in Australia is a highly labour-intensive process. Unlike the automotive industry, which relies heavily on automation and operates on a global scale, the vast majority of Australian builders still assemble vans by hand. Labour is expensive relative to many Asian options, so wages are a major part of the cost of doing business. The component costs are also high. During COVID, part prices rose steadily, and they haven't retreated over the last two years. Steel prices, too, have risen dramatically, making the chassis and suspension more costly.
Manufacturers not keeping a close eye on production costs will end up in trouble. It's worth noting that when the new owners took on the Zone empire, prices went up $20k, because it appears the sale price wasn’t sustainable.
8 Warranty Costs. For a variety of reasons often attributed to rushed COVID builds, the warranty cost was not factored into the sale price of vans. Anecdotal evidence suggests Zone was burdened with many costly chassis repairs, which damaged the bottom line.
9 Imports. For the last decade, the local industry has seen a significant rise in competition from overseas. Hybrid campers and caravans from China flooded the lower- to mid-tier segments of the market, virtually killing the local camper industry. While you can argue over build quality and techniques, the reality is that for a younger demographic looking to enter the market, a cheaper import is often the only financially viable option. As quality improves, imported vans are a genuine option across the range, offering ready-to-travel models at a very competitive price. Because many imported vans are sold by low-volume brands, it doesn't make major news when these businesses fold. Many smaller "brands" are simply local marketing setups importing generic catalogue designs. If one local importer struggles, they often quietly stop ordering containers or sell their stock to another dealer rather than going through a public Supreme Court liquidation. The brand name fades away, but no formal insolvency is recorded.
10 Caravan Shows are a major cost for dealers and builders. It's not uncommon to see six-figure bills for sites at shows, and many builders can't achieve a reasonable return. Many are resentful but locked into the system, afraid of missing out if they don't attend. Shows are a cost to the business, and that cost has to be reflected in the van's price in a never-ending cycle of rising sticker prices.
11 Debtor awareness. Suppliers and government agencies have become more proactive when businesses accrue debt, now acting more quickly and initiating legal action to be first in line to recover debts. It has been reported that both Great Aussie Caravans and Ourgen RV were pushed into liquidation following legal battles over unpaid debts to workplace authorities. When cash flow tightens, these fixed operational costs become impossible to manage.
12 Stale model ranges. A comment I see regularly from friends who have visited Caravan shows is that so many vans are the same. It's true. As soon as a builder introduces a new concept, you can bet it will be on many Campbellfield vans within a few weeks. A successful builder must continually refresh their range to stay abreast of trends, and that takes ingenuity and design prowess.
At a more basic level, many builders have been slow to see the shift away from timber frames in vans and haven't recognised the high cost of switching to a composite build. While a well-built timber van has a place, many timber vans suffer leaks and water damage, and there's now enough online to dissuade buyers from Meranti. Many smaller, less tech-savvy builders will find it hard to transition.
Where to from Here?
The current wave of insolvencies does not signal the end of the Australian caravan industry. Latest State of the Industry data shows total RV registrations grew by 4 per cent to more than 937,000 vehicles, indicating that demand for regional travel is a big part of the Australian tradition.
Instead, the market is rapidly consolidating. The traditional model of more than a hundred small builders operating in Melbourne’s northern suburbs is shifting. Stronger, better-capitalised entities are acquiring troubled brands, as evidenced by Essential Caravans' absorption of Zone RV's assets. There is similar potential for Sunland to continue under new ownership.
For buyers, this landscape requires greater due diligence. Purchasing decisions now extend beyond first impressions or smooth-talking salespeople. Buyers should evaluate the builder's corporate health, warranty networks, and manufacturing efficiency. Can they explain the build process and why they manufacture that way? Can they explain weights and the best tow vehicle for the van? Are they members of the Industry bodies? What's the online feedback like?
Organise a factory tour to see for yourself how the van is put together. Check out the vibe on the factory floor - if the crew seem well organised, productive and happy, there's a good chance they are taking pride in what they do.
Most importantly, assess risk by reviewing deposit requirements and confirm contract terms regarding final payment upon delivery.
Anyone considering a new van should see the current market as a great buying opportunity. The roads will open up, and those dreamy destinations will still be there waiting.
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A Perfect Storm Hits the Local Caravan Industry?