Thank you, Mr. Chair.
My name is Shane Devenish, and I'm representing the Recreation Vehicle Dealers Association, or RVDA, of Canada.
With me today is Gord Bragg, vice-president of RVDA of B.C. and an owner of an RV dealership located on Vancouver Island.
We appreciate the invitation to be here today in the context of your 2009 pre-budget consultations. We will take this opportunity to highlight for the committee the impact that the ongoing credit crisis has had on the RV industry.
The RVDA of Canada is a national volunteer federation of provincial and regional RVDA associations and their members who have united to form a professional trade association for businesses involved in the recreational vehicle industry.
The RV industry has enjoyed strong sales over the past several years as Canadian consumers have moved to the affordable and flexible travel offered by RV ownership. Currently, more than 14% of all Canadian households own an RV. The demographics of our buyers demonstrate future growth in the coming years. However, as prices, affordability, and demand are driving retail sales, RV dealers today are facing an unprecedented wholesale finance crisis.
A recent poll from the RVDA of Canada's 420 dealer members reports the lack of floor-plan financing as their biggest concern currently facing their businesses. The contraction of available business credit has been caused by the following: the departure of Textron Financial early in 2009, leaving GE as the only non-bank floor-plan source; the business model of the big five banks are not conducive to large-scale floor-plan financing; GE's current mandate towards neutral growth; and the absence of an entrance of a new financial institution to our market.
At times the industry has had as many as six lenders that would floor-plan finance RV inventory. However, despite strong demand for the product, the association is left with having only one non-bank lender and a few banks, but on an individual basis and for only financially strong dealers.
The RVDA of Canada estimates that in 2008, aggregate new loan activity to Canadian RV dealerships was between $1.15 billion and $1.3 billion, with a total receivable base of between $650 million and $750 million. At the time of their exit, Textron Financial had an estimated 30% market share of the above, which for the most part remains a void.
While the RVDA of Canada is aware of and supportive of the $12 billion Canadian secured credit facility, the program's ability to deliver floor-plan financing to the RV dealership level has not been identified up to this point. As such, the challenge remains, that being the government providing the means to entice new lenders to the RV sector through the CSCF or by other means.
On July 1, 2009, the U.S. Small Business Administration launched a new pilot program for dealer floor-plan financing. Through this new program, RV and marine dealerships can apply for SBA guaranteed floor-plan financing through an authorized financial institution. This program has enticed additional lenders to the industry and made it easier for small businesses to gain necessary capital to borrow against their inventory.
RVDA met with officials from the policy sector branch in August to propose similar assistance in the form of a loan guarantee in order to attract new lenders into our market. The guarantee would be necessary in the short term only, say two to three years, until such time as the markets resume ordinance. This form of assistance would appear to be the most attractive to a prospective institution looking to enter the floor-plan market. We have not found any company as of today willing to floor-plan our dealers without this form of assurance.
We are eager to work collaboratively towards finding a credit solution that makes sense for the Canadian RV industry, the government, and the Canadian public. The RV market has stability, profitability, and a long history of low-risk loans. We are therefore providing the following recommendation for a federal program spending measure that will ensure prosperity and a sustainable future for Canadians.
The RVDA of Canada recommends that the Canadian secured credit facility hereby be modified to include floor-plan loans that will be helpful to RV dealers through funding that can be directly injected into the RV marketplace. Without adequate floor-plan financing, RV dealers--dealers who have been profitable and a going concern for several years--will not have the ability to maintain a viable business past this year. We desperately need the government's assistance to pass action in order to attract new lenders to the market.
Please consider the following. The retail RV sector is not simply a one-time retail sale. RVing and the RV lifestyle make critical economic contributions to ongoing tourism and recreational spending in every region of Canada.
Thank you again for the opportunity to address the committee today.