Why caravan companies are going out of business

The downfall of two Melbourne-based caravan manufacturers has left dozens of customers facing hefty losses and raised questions about the health of an industry centred in Victoria.

Australia’s caravan industry is nursing a Covid boom hangover that is worsening as the cost of living crisis bites.

The downfall of two Melbourne-based caravan manufacturers has left dozens of customers facing hefty losses and raised questions about the health of an industry centred in Victoria.

“There’s less orders from customers so manufacturers are making less vans because the demand is lower, so profits are down and expenses are up,” an employee at a Melbourne caravan supplier told the Herald Sun.

Caravanning exploded in popularity as Australians were locked down and prevented from travelling overseas during the pandemic.

The number of vans being built surged, jumping 41 per cent to a record 23,931 in 2021.

That lift added to an 11.5 per cent increase in vehicle numbers, both towable and motorised, recorded over 2020.

At its peak, the wait time for new vans hit two years.

Caravan Industry Association of Australia spokesman Luke Chippindale told the Herald Sun wait times today were back to the three-month mark.

Mr Chippindale said while the industry was facing headwinds, demand still remained strong by any historical measure.

“It’s not what it was but manufacturers are now having to adjust to that, as well,” he said.

“We’re still above the pre-Covid level – 2 or 3 per cent up on 2019 – in terms of manufacturing, so the demand is certainly still there.”

The comedown from the Covid high can be attributed to multiple factors, Mr Chippendale said.

The cost of living crisis has forced some consumers to reconsider the purchase of a new van, which on average costs between $60,000 to $80,000.

Aussies also have more holidaying options, such as cruising and international travel, than they had during the Covid years.

Australian Bureau of Statistics data shows international travel has now rebounded to pre-pandemic levels.

“The 55-plus market has started to move back more towards what some would classify as their more traditional travel behaviours, cruising and international travel, but the family market is still really strong,” Mr Chippendale said.

“The 35 to 54 age bracket is still really focused on caravanning and seeing the country.”

Rather than a demand slump, Mr Chippendale said the key headwind facing the industry was the high cost of doing business.

Labour, material and supply chain costs had all increased and there was also more competition from imported brands, he said.

“For the most part, I think you’ll find that most businesses are doing their utmost to ensure that they’re delivering for their customers in what is a really costly time to operate,” he said.

“When we start to look at an industry trend, we’re not necessarily seeing the liquidation of manufacturers left, right and centre.

“The fact that we’re still holding tight as a manufacturing industry is really a testament to the resilience of those Australian manufacturers trying to find that new norm as we move forward.”

Not all in the industry are as confident.

Industry insiders told the Herald Sun vans simply were not selling, with one saying he expected the downturn to last at least two years.

The industry employees also warned more businesses could fold before Christmas, following the collapse of Tango Caravans and Highline Caravans which both went into liquidation this year.

“There’s a few companies that are selling, but most of them aren’t,” one said.

“No one wants to buy because of the cost of living, interest rates and things like that.”

When Highline Caravans announced its closure in May, it put it bluntly: “The last six months have proved to be very challenging and faced with the immense decline that the whole industry is seeing, the sales simply ran out and we were forced to make the hard decision to close the doors”.

The business had significant debts when it went bust, owing more than $1.14m.

The Australian Taxation Office was listed as the largest creditor, owed $235,802, while other creditors included Caravan & Camping Aus owed $110,931, Battery Stop owed $85,235, Plenty River Plumbing owed $72,018 and Intelligent Engineering owed $58,488.

Highline’s liquidator found no cash in the bank and just $10,000 in other assets.

Similarly, Tango Caravans collapsed into liquidation with “significant” debts in mid-August.

Its downfall appears more complicated with customers saying the business had taken their money for vans before cancelling the order with third-party manufacturers.