Curtin Upgrades 2004 and 2005 Forecasts
Economist Richard Curtin of the University of Michigan is taking a brighter view of the RV industry’s prospects than he did in the fall and has revised his projected shipment totals upward for both 2004 and 2005.
Curtin now predicts 2005 industry shipments will decline by 3.3% versus the 8.6% dip he had forecast earlier, according to the winter 2004 edition of Roadsigns, published quarterly by the Recreation Vehicle Industry Association (RVIA).
Curtin anticipates 2004 year-end deliveries of 364,900 units – a 13.7% gain over 2003 and about 1% higher than his last forecast of 361,200. And he foresees 2005 deliveries reaching 352,700 units, up from 332,700 in the previous forecast.
“It looks like we will have continued strong sales in the coming year,” said Mac Bryan, vice president of administration for RVIA. “If you said, in terms of wholesale, that 2005 would be the same as 2004, which was a great year, I don’t think you would be too far off.
“I think the underlying factors in his previous projection – job growth, interest rates and after-tax disposable income – have shifted. Employment numbers for the last six months are up, and that’s with some anemic numbers in July and August that had people concerned the economy had topped out. But October and November were robust.”
He added: “The main thing that can affect disposable income is inflation. We have seen the Fed increase interest rates at a measured pace, and if they can continue to control inflation then that will do a lot toward controlling rising prices. Overall, the economy is on good footing.”
In the latest Roadsigns, Curtin said, “The temporary slowdown in the pace of growth in RV shipments during 2005 is due to interest rates and persistently high gas prices.”
Curtain also anticipates a continued shift toward fifth-wheel, hybrid and conventional travel trailers in 2005, noting that totals in that sector have doubled in the last decade and now account for 70% of RV shipments.
Bryan agreed the benchmark prime interest rate, which increased to 5.25% on Dec. 14 and is expected to climb in 2005, would eventually have an effect on the higher-end RV market.
“The higher interest rates could begin to squeeze higher-priced products, both towables and motorhomes,” he said. “That sector drove the market in 2004. I think it will continue to dominate in 2005, just not to the extent that you saw this year.”
Bryan contends the beginning of 2005 will offer a good barometer for the year.
“We will be looking closely to see how the new products are received by the public and how it affects dealer inventory and retail sales moving into the spring.”