Thank you for seeing us today.
I'm Jeff Hanemaayer. I'm the vice-president and a director of the Canadian Recreational Vehicle Association, CRVA. It's a non-profit industry association representing manufacturers and suppliers to the Canadian RV industry.
I'm not a financial expert, but I am joined by Pierre Major. He's the president of Textron Financial Canada's floor plan division. However, he's here not representing Textron Financial Canada, but instead basically as an expert in the field of floor plan financing in Canada.
The Canadian RV industry is valued at about $3.5 billion. That doesn't include revenue generated by campgrounds or other economic impacts that result in the tourism sector as a result of RVing. RV ownership hit a record level in 2008, with 14% of Canadian households owning an RV; that equates to over a million RVs in Canada.
RV retail sales in Canada in 2008 reached a record high of almost 58,000 new units, both motorized and towable. Although the credit crisis has reduced retail demand from record levels, demand currently remains reasonable by historic standards—this despite the fact that retail lending standards have become more strict, resulting in more willing buyers being left without retail financing.
Retail financing is still reasonably available to diligent RV dealers for credit-worthy customers. The bigger problem the industry has is that although retail sales are reasonable by historic standards, floor plan financing for dealers has become much more difficult to acquire and maintain. Survey results from members of the RV Dealers Association of Canada cite the lack of floor plan financing as their number one concern for 2009. Without adequate floor plan financing, dealers are not able to maintain an appropriate number of RVs to maximize their sales and profits.
Reduced dealer floor plan availability has been caused by three things: as mentioned earlier, the exit from RV floor plan business by Textron Financial Canada, which is one of only two major non-bank floor plan lenders in Canada, both of whom happen to be U.S.-owned; reduced lending by the other one; and the last would be minimal interest from Canadian chartered banks to increase their lending.
We have a few suggestions to improve availability of floor plan lending to the RV industry.
One would be to modify the Canada Small Business Financing Act: first to include RV dealer floor plans—RV dealers sell big-ticket items for small margins, so we need to revise the eligibility to include businesses with annual sales over $5 million; second, to revise what is eligible for financing to include RV inventory; and last, to increase the loan limits beyond the recently increased current limit to $1 million.
A second suggestion is to broaden the BDC's mandate to include RV dealer floor plan.
A third is to modify the Canadian Secured Credit Facility to include RV dealer floor plans; currently, the facility only allows for loans for vehicles and equipment.
The last is to encourage Canadian chartered banks and other lenders to increase RV dealer floor plan lending. The big banks already benefit from retail RV lending, which has a lower risk than other forms of consumer loans. They provide floor plan to a small number of dealers with whom they've had a long-term relationship; however, they are reluctant and are risk-adverse to offering new floor plan lending.
Finally, with the only other remaining non-bank floor plan lender being U.S.-based, their Canadian businesses may not be their first priority. The Canadian industry, already affected by one U.S.-based lender leaving the market, would be less vulnerable if there were other major, Canadian-sourced lenders.
Thank you.