National City Revs Up 'Rec' Lending

December 1, 2003
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KALAMAZOO — National City is harnessing more than 50 years of experience in marine and recreational vehicle financing to grow its recreation finance division nationwide.

The bank’s plan is to boost annual originations of marine and RV financing from $1 billion to $4 billion over the next five years.

“This year we put in place a five-year plan where we will go from the No. 5 lender in the United States in the recreation finance area to the No. 1 lender,” said Eric Giering, division manager, who recently transferred from Grand Rapids.

“Right now in the Midwest, we are No. 1. We want to expand it to a major role nationally.”

As part of the effort, the company created an inside sales team, a Dealer Support Service Center and a core underwriting group dedicated solely to marine and RV dealers.

Giering said his office has seen a steady increase in business in the five months since it announced the division’s expansion goals.

The bank currently has 14 people in recreation sales and just hired a regional manager to cover the southwest and west regions of the country. Giering said he’s also looking for a regional manager to cover the southeast region and expects to add about 10 more people to the division’s staff in coming months. 

“The way recreational lending works is that we’ll hook up with a dealer and put together an ‘indirect lending’ program for them. We qualify our dealers for the program and then they have the ability to originate loans through National City for their customers,” Giering explained.

Since August, the recreation finance division’s dealer base has increased 34 percent, he added. Furthermore, in August and September the recreational finance division saw a 60 percent increase in loan origination volume, up about 30 percent over 2002.  

Giering said the recreation division also has a special retail-lending program for boat and RV manufacturers that gives the manufacturers’ own dealers an opportunity to sign up for the program.

Besides competitive loan rates and flexible financing alternatives, the recreation finance division offers a little something more, he said. 

“We pride ourselves on being rather unique in the fact that our dealers have access to our underwriters if they have a question. That is not something that all other banks offer.

“The other thing is consistency. Once a dealer has experience with our credit buying practices and how we operate, they’ll know on a very routine basis exactly how we’re going to handle things. That’s something that is also not present in all banks in the industry.”

There’s a good deal of seasonality to recreational sales, particularly in the Midwest, he said. Both boat and RV sales drop when the temperatures drop.

That’s one of the reasons the division is expanding nationally, he said, because states like Florida, California and Arizona have a longer season.

“In the desert Southwest you have a lot of snow-bird parks where retirees live during the winter, and a lot of the dealerships in that area see some pretty good increases during that time of year.”

Recreational vehicle sales were down for a long time but have been up considerably over the past few years, Giering noted.

According to an industry forecast released in October, “factory-to-dealer deliveries of recreation vehicles are expected to record the third-highest year in a quarter century as baby boomers continue to drive up sales.”

University of Michigan researcher Richard Curtin predicts wholesale shipments this year will reach 307,700 units, which is comparable to 2002 levels. According to Curtin, RV sales were boosted by low interest rates and extra cash generated from mortgage refinancing.

Market data compiled by the Recreation Vehicle Industry Association (RIVA) indicates that manufacturers produced roughly 21 percent more RVs in 2002 than in 2001.

Certain segments of the boat industry are doing well, too. Sales of the small, 20- to 24-foot runabout boats are hurting a bit, he said. The larger boats are actually selling better.

Giering, along with members of his sales team, attended the RV Dealers International Convention/Expo in Las Vegas Sept. 30 through Oct. 3.

“The response we got from the dealers in Las Vegas was absolutely tremendous,” he recalled.

“Our booth location wasn’t the best. We were up on a stage and at the back of the stage. People had to come looking for us, and they sure did.

“We were very happy with the response and the turnout we got at our booth.”

He and other members of his division are now headed to the RIVA Trade Show for manufacturers in Louisville, Ky., which runs Wednesday through Friday this week.

RIVA is a national association representing 500 manufacturers and component suppliers that produce some 98 percent of all RVs made in the United States.    

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