NeXus RV taking the ‘Factory–Direct’ business model to a whole new level!
“We’re certainly not as big as some of the larger publicly traded companies because we just didn’t have the capital when we started,” said Nexus RV president, Claude Donati. “Yet, we are becoming a very sizable company that’s appropriately positioned to take care of its customers and grow.”
Although it’s certainly not the traditional way of doing business in the recreational vehicle industry, a factory-direct strategy has become a pivotal business tenet for a couple of well-known RV manufacturing executives and their four-year-old, 90 employee, motorized RV manufacturing firm, Nexus RV, on the northeast side of Elkhart, Indiana.
Nexus RV co-founders Claude Donati and Dave Middleton not only build their own motorhomes, but personally interface with the consumer, operate their own sales staff, handle trades, close transactions, and oversee their own service network entirely outside the purview of conventional retail dealerships.
And while that’s a strategy that does not sit well with the rank-and-file membership of the Recreational Vehicle Dealers Association (RVDA) as well as hundreds of other independent retailers, it’s an approach that Donati, President and Middleton, Vice President, have pursued on a national scale with some success since the day they opened the doors to their unique northern Indiana firm.
In addition to introducing its first diesel-pusher Class A motorhome at the Florida RV Trade Association’s 2015 Florida RV SuperShow, Nexus RV has achieved consistent growth since its 2010 launch.
“Four years in a row we’ve doubled our business,” Donati told RVBusiness. “Obviously when you’re a young company, the first two to three years is not really that difficult to do because you’re starting small. But we’re now at a point where we’re expecting to double it again into our fifth year, which is pretty sizeable. We’re certainly not as big as some of the larger publicly traded companies because we just didn’t have the capital when we started. Yet, we are becoming a very sizable company that’s appropriately positioned to take care of customers and grow.”
As most in the industry well know, a handful of companies have operated factory-direct to varying degrees for years – Florida’s Coach House Inc., California’s Lazy Days Motor Homes, Indiana’s Phoenix Cruiser, and the Lone Star State’s Foretravel Inc. are among them.
But Donati and Middleton feel they’re onto something new and rather trendy in their approach to marketing their company’s Ghost Super C, Phantom Class C, and Viper Class B-plus motorhomes by emulating some high-profile consumer-oriented companies that go direct to consumer such as Apple with its IPhone, Gap Inc. with Gap jeans, and Starbucks and with Starbucks coffee.
Even more closely related to the RV industry, they point out that Tesla Motors has been selling cars without a dealer network. “We see these companies taking advantage of a cultural shift,” said Middleton. “People want to buy from companies directly. They have a sense of ‘being in the know,’ and they get to add some personal touches to their products.”
Fact is, they consider the factory-direct approach which, they maintain, ultimately saves the consumer money and gives him/her more choice – as a way of the future.
“You have these companies that really want to be able to give the customer what they want without anybody in the middle of that whole transaction,” Donati asserted. “Our retail customers feel the same way. There’s this urge and need to be intimate with the manufacturer. We don’t think it’s a novel approach necessarily; we think it’s a big trend happening in our culture. Factory-direct sells because people (consumers) want to have a better opportunity to have built what they want.”
“And it’s our position – our belief – that if any high-finance or big-capital company decided to do this model by owning their own dealerships, that this is the way RVs are going to be sold,” added Donati, who, like his boyhood classmate, Middleton, is a former Gulf Stream Coach Inc. executive. “It’s just a matter of time; it just makes sense.”
In the big picture, Nexus, which includes among its investors and consultants former Gulf Stream Motorized Division President Brian Shea, certainly has injected some novel twists into their factory-direct toolbox in an effort to take it to a whole new national level.
Here’s a snapshot of how the Nexus business model works: Consumers who hear about Nexus through consumer magazine ads, internet chatter, or word-of-mouth sources typically make contact with the company and its six-person sales staff. Then, depending on their location, many of them travel to Elkhart to get a closer look at the company’s motorhomes set up in its 25,000-square-foot Elkhart showroom. They can also take a leisurely ride in a cart around the firm’s 100,000-square-foot facility, including production areas.
Prospective motorhome buyers situated too far away from the upper Midwest, however, have for the past year had the ability to instead visit either company has set up, in Temecula, Calif., or Clearwater Fla., to essentially prove to themselves that what they’ve see on the Internet or elsewhere is exactly what it’s purported to be.
Even though some consumers are indeed prone to making an outright purchase sight unseen, Donti and Middleton say that most would-be buyers need to visit the plant in order to touch and feel the coach – a relatively big discretionary purchase for much of the buying public – before they’re comfortable making a final decision. Nexus will likely have on display anywhere from 15 to 25 units – nine or 10 of them at Elkhart plant – at its three locations at any one time.
“We believe that our (Elkhart) showroom isn’t a showroom like every other dealer in America,” explained Middleton. “Our showroom is our factory. When you come here, you don’t necessarily want to see a completely finished product or 25 of the same floor plan with different colors. You want to see how we weld the sidewalls together, how we laminate the walls. You want to meet the guy that builds the cabinets. You want to meet the lady that puts your interiors together because you get to choose that stuff. You are interacting with the factory and customers just roll over for this; it’s what they want, it’s what’s missing.”
For the record, consumers are welcome to customize their new coaches to a certain extent. Through a process they call “menu customization,” there’s a set list of things motorhome buyers can change including some furniture, the location of certain electrical outlets or the addition of a cabinet, TV or fireplace. Middleton said it’s the kind of thing they’re open to doing when they can.
“Absolutely, we do it most of the time,” he added. “It may slow down the production process a little bit and the customer realizes that – that it may cost them a little bit of money. But at the end of the day, they’re investing a hundred thousand or a hundred fifty thousand dollars, and they don’t want to buy the green one that’s been sitting on the lot for seven months. They want to build the product they want, and we want to give it to them because when they roll out of our factory, their unit in brand new. There’s no age to that unit at all.”
Those remote facilities in Southern California and the Florida Gulf Coast have obviously given Nexus an added edge on the national map, although Donati pointed out that the California shop, strategically located in Riverside County with just a few units on display, is only for showing product at this point. Nexus isn’t licensed at this point to sell motorhomes in California.
Because it has no staff there, in fact, this camera-equipped facility can be accessed electronically by consumers who, after contacting Nexus directly, are given a passcode so that they can enter the facility on their own and chat via Skype with Nexus factory reps while checking out their unit. Then, consumers can order a unit over the internet or the phone.
On the other hand, the Florida location is a “full blown dealership,” providing Nexus with access to another important geographic market and with a logical place to which Snowbirds and others can go after visiting the Nexus display at the Tampa Show and other winter events. It also gives Nexus a front-line, ear-round venue from which to handle sales of trade-ins – something Nexus routinely does in Elkhart and Clearwater as a revenue-generating aspect of its business and to facilitate new unit sales.
“As for out location in Florida,” explained Middleton, leaning on a 29-foot Viper B-Plus motorhome, a triple-slide unit and the companies No. 1 seller, “we’ve done a lot of business in that state already. So, we’ve invested and opened up a factory-direct store there. We don’t build them there, but we do have a salesperson there to take them (shoppers) through, show them the products, and we’ll take trades, so that is a fully functional dealership.”
Things have gone well enough with the remote locations, added Donati, that Nexus is planning to expand its network over the next year from coast to coast, most likely next in the Southwest and in the “mid-central” region of the country. “So, we’ll have four dealerships running the I-10 corridor from Jacksonville all the way to L.A., and then you have our factory here in the Midwest and we think that covers us for the next year,” Donati explained. “Once we get a little more time behind us on the showroom we’ll then start to look at doing locations throughout the country, targeting the biggest RV areas and the ones that are most remote like Seattle, Denver, and maybe the Northeast. But we’re tapping into the Northeast pretty effectively from Indiana.”
Donati said that Nexus, which introduced its latest model at last winter’s Tampa show – a 34- to 36-foot, multiple slide, Ghost “Super C” on a 19,500-pound GVWR International Navistar Terra Star truck chassis – has taken an equally inventive approach to service,
“We believe we offer the best service network of any dealer in America,” said Donati. “We have over 200 service centers that have been signed up, vetted and are certified to manage our warranty in the field that can be found through a dealer locator on our website. If you’re a customer and you live in Topeka, Kan., and you want to use a service center that you’re familiar with, we’ll call your service center whether he’s an active dealer, a mobile service center or a friend.
“If he’s certified and qualified to work on our units and you as a customer want to go to him because you like him, we will call him in front of you while you’re there (buying a coach) at the closing table to answer your concerns about where you’re going to get this unit serviced, and we will sign him up to be your warranty provider.”
It’s not a perfect system, Donati confides, because there’s some holes in the map in locales like Montana, where Nexus currently has no service backup. On the other hand, Nexus has established critical support in most of the nation’s RV hot spots.
Meanwhile, Donati and Middleton weren’t saying all that much late this summer with regard to the development of that Class A diesel pusher and its January debut in Tampa – a product that will clearly come in on top of the company’s current $60,000 to $160,000 product lineup.
“This is a project that we have taken our time on,” noted Donati. “We’ve got enough customers and enough inquiries asking about it. Be we’re not rushing it. We are listening; we’re looking at what the customers want – the perfect size, length and amenities. All we can add right now is that it’s going to have all the bells and whistles at a very aggressive price point.”
Donati admits that developing a full-fledged diesel pusher on a Freightliner chassis is a pretty tall order for a company the size of Nexus. “The big thing is we’re going with a configuration in the chassis that no one else is doing and that will really add some value,” added Donati. “It is big and it is exciting, but we’re not just doing ourselves. It takes a team to make something like this happen.”