I am a long time R/C'r and I have a few different thoughts on this. We up here in the midwest are seeing the same decline in Nitro touring.
My first R/C car was a HPI Nitro RS4, and as someone said above, it was great - buying upgrades as you needed or wanted and just an easy progression in the hobby at the cost and speed you wanted. I remember people racing bone stock RS4's against highly modded RS4's but since almost all the motors had the same .56Hp back then there was differences but not that much, more just for fun. Tools needed to support the cars were cheap and generic.
My second on road R/C was a HPI RS43-SS (this was my "getting back into nitro touring" car car a few years ago). it was a fun car to bash around in a parking lot with friends. But soon we were finding that costs were getting pretty harsh for parts and such. but I do attribute this to the added power in the cars compared to previous as reasons that cars break more now.
I started getting involved in local tracks last year with the RS4-3. There were people racing VoneRR's, MTX3's, etc.. and my HPI was uncompetitive, but to get it there I kept hemorrhaging money into it. it never got there. Last year we saw many people come out for one weekend to race, break their car, and that was the last we ever saw of them.
This year I realized the "cheaper" way of running competitively is just buying a car made for that kind of racing and my FW-05RR has cost me MUCH less to get racing than my HPI. But its still more expensive than any other form of R/C I have done. But now tools needed are going up in price. A tool to just change the pinions on the clutch is nearly 40$, of course for the foams you need a truer, thatís another 100 - 300$, many foams, etc..
Now my thoughts on WHY the scene is die'n.:
Tracks are what makes/breaks this hobby I think. More so than money (or maybe in conjunction with). the situations are either 1. No tracks in an area, 2. Tracks that favor only high power engines and little else, 3. tracks that are poorly constructed or on poor surfaces.
1. is just a fact of life, pretty much its something people should evaluate before they get into the hobby. I know many people who just bitch and bitch about having to drive 1 hour to get to a track. I donít think its a big deal, but with gas at 2.50$ a gallon its becoming a big deal. Because numbers are dropping for on road racing, shops and people cant afford to build new tracks.
2. It seems many tracks being run now are being made very flowing, and open. These are fun tracks for people who have engines to just rocket, but really dont favor better drivers with cheaper engines. They also eat up foams so fast that you use up a 16 - 30$ set of foams in a weekend! The track I race at has a tight track, and one high speed stretch. The fast 400$ engines rocket down the straight but in the technical area a good driver can take a 150$ engine and pass the person with a 400$ one with ease. that makes a track fun and balanced. Most tracks in the area are NOT like that and that is quite discouraging to new people I think. The technical tracks are also discouraging for people who think they can just set the car down and floor it because they bust their cars and just donít find the driving fun. Its all about having people realize what real "control" is needed.
3. A track that has rock solid walls, bad surfaces, or just a bad organizations by the staff running it really turn people off. That only results in more damage to their cars, frustration, and higher costs.
Also many people just donít like the "rules" and restriction placed for touring racing either. Since many RTR kits are sold with engines that donít even meet the regulations at most tracks.
Really Nitro Touring car is hard. Its difficult to drive at 10/10ths of its potential, its expensive if you do as much as lose focus for an instant at speed, and running costs are astronomical in some cases. I mean none of this is different between Nitro touring and 1/8th on road. But it seems that people who are willing to drop the money for 1/10th touring at a competitive level just drop the additional and go to 1/8th then. (the price jump is quite big for that also).
The reason dads and their sons are all going into off road, is its easy. you can do it in the back yard, you can go toa local track. you can run for a day or a weekend or a month and spend only fuel. With a sedan, you just cant do that.
The guy who runs the track I run at, runs the R/C days at a loss but does it just for fun. Unfortunately most tracks cant run like that.