China boom in sales of caravans surprises even distributors

The demand for European or American-made recreational vehicles is so strong, new buyers must wait up to two years for delivery

PUBLISHED : Tuesday, 24 September, 2013, 12:00am
UPDATED : Tuesday, 24 September, 2013, 8:54am

Sales of recreational vehicles (RVs) and caravans are booming on the mainland, to the surprise of even car dealers.

Last month, a four-day exhibition of the home-like vehicles in Beijing ended with sellers pocketing 550 million yuan (HK$700 million) in revenue. About 40,000 visitors streamed into the show, and more than 500 vehicles were sold.

"It is crazy," said Li Mengsha , a sales consultant with Beijing Camper RV, the largest distributor for RVs and caravans on the mainland. "Many vehicles came straight to the show from seaports. Most were sold before I had a chance to step inside for a look. I am a sales agent, for heaven's sake!" she said, sipping a cup of tea in one of the few caravans left at the company's headquarters more than a week after the event. Outside, more than a dozen potential buyers were checking out the vehicles.

"And people have kept coming even after the show was over. Their enthusiasm has exceeded my wildest guesses," Li said.

Recreational vehicles have been on the mainland market for more than two decades, but they had long been regarded as a luxury purchase for niche buyers because of their high prices and lack of supporting facilities such as camping sites.

But recently, the demand has exploded. "A few years ago, there were only a few thousand RVs in China. But now the total number might reach tens of thousands, though no official figure has been given," Li said.

When the first RV and caravan show was held in 2010, there were only about 40 vehicles on exhibition, bringing a few million yuan in sales, according to Li. Last year's show generated about 500 million yuan in revenue.

"The boom surprised everyone in the industry," Li said. She listed possible causes behind it: rising middle class incomes, a new generation of retirees who were more amenable to the lifestyle, and climbing housing prices. "But none can fully explain the sudden growth. It just came."

Li said most buyers wanted caravans made in Europe or the United States, that cost between 150,000 yuan and 300,000 yuan. Overseas factories has not been able to keep up with the demand. After placing an order, consumers in the mainland must often wait more than a year, if not two, for delivery.

Bai Long , a sales consultant with Flying Cloud Beijing, which distributes the Airstream brand, said many overseas RV makers had yet to grasp the sales growth potential on the mainland. "Even if they doubled the size of their plant, they could not satisfy the demand in China," he said.

"The only solution seems to be setting up factories in China, but that would also be difficult, because many procedures in RV manufacturing are done by hand, which require years, if not decades, of work experience. RVs made by Chinese workers will not match imported ones anytime soon."

However, drivers who want to steer a caravan around the mainland still face many inconveniences.

Government regulations for RVs were introduced in 2008, and the first caravan licence in Beijing was issued in 2009. At some highway toll stations, staff are often stumped as to how to classify the vehicle, and end up calling it a cargo truck.

Li Xiang , a semi-retired businessman in Guangdong who has towed a caravan on the mainland for more than two years, said he had to print out a copy of the latest version of traffic regulations and mark the RV-related information in red to easily show traffic police or toll station staff to avoid fines or disputes.

"RVs are still new to most parts of China, and we have to constantly prove that we are legal," he said.

But the biggest trouble was finding a camping site. The mainland has few sites for RV camping with water, electricity and drainage facilities. Those in service often charge a lot, which makes it cheaper to stay in a hotel. "It is embarrassing, but most of the time I park in a hotel's parking lot. I dare not stay out in the wild with the entire family aboard for fear of being robbed," Li said.

For others, the vehicles are an alternative to the real estate market. Lu Xiaotian , a computer engineer in Beijing, said the price of a roomy caravan was less than the bathroom of a downtown apartment. "I am thinking to rent a small piece of land in the suburbs near the Fifth Ring Road and fit it with water and electricity for a caravan," he said. "I don't want to burden myself and my family with housing loans. I want to live free."