Baird Poll: Dealers Coping in Soft Market
Robert W. Baird & Co., a Milwaukee, Wisc.-based investment firm that regularly tracks the recreational vehicle industry, recently released findings from a survey of 112 dealers designed to gauge dealer sentiment and trends during the second quarter.
Results of the company’s “July RV Dealer Survey” showed dealers remain upbeat about the long-term market outlook despite soft retail demand and a slowing in discretionary spending.
Other highlights from the Baird report include:
• Retail: Retail demand fell in Q2 as consumers slowed discretionary spending. Towable volume fell 2% according to data provided by dealers, mitigating a more severe 13% motorhome decline. Dealer commentary suggests a slightly better environment than the data implies – especially in niche markets.
• Inventory: Dealer inventory levels remain high as interest costs rise, forcing dealers to curb orders in order to reduce floorplan financing costs. Relative to April, dealers are slightly more comfortable, but still plan to deplete inventory following normal seasonal patterns and to avoid finance costs.
• Outlook: Despite slowing discretionary spending, only 28% of dealers expect conditions to worsen in the next three months and 26% expect conditions to worsen next year. The survey concluded prior to the escalation of military action in the Middle East. Halfway through the year, dealers expect a 4% decline in retail motorhome sales (implying a better second half) and a 2% increase in towable retail volume.
• Promotional Activity: Despite higher inventory and softer sales, the promotional environment remains surprisingly inert. Only 11% of dealers noted an increase in promotional activity in the quarter compared to 31% who report a decline. The remaining 58% say the level of promotions is unchanged.
• Summary: Conditions remain soft – especially for motorhome dealers – as discretionary spending slows. A few dealers noted a slowdown in trade-in activity, which supports Baird’s thesis that rising rates and a lack of broad-based innovation is driving the current slowdown. Inventory levels remain high, forcing dealers to reduce orders to manage floorplan costs.