Baird Poll: Motorized Retail Soft, Towables Up
In its recently released “Q3 RV Dealer Survey,” investment firm Robert W. Baird & Co. Inc. found that motorhome demand remained soft while the towable market was healthy and retailers are planning for growth. However, an eroding housing market still looms and could depress discretionary spending.
Milwaukee-based Baird polled 161 dealers to gauge retail trends, inventories, promotional activity and 2007 expectations heading into the fourth quarter. The following offers highlights from the survey.
• Retail: Motorhome sales fell 8-12% in the third quarter, according to dealers, while towable sales improved 5-8%. The results represent “modest disappointment” to dealers, although Baird noted, “It is hard to argue with the strength in the towable market despite weak spending patterns in other discretionary markets.”
• Traffic: Traffic on dealer lots fell in the third quarter versus last year, and worsened as the quarter progressed. Baird said that a key factor is that consumers “have less money to spend” as homes lose value and household costs rise.
• Inventory: Dealers remain reluctant to stock inventory. The number of days of inventory fell to 127 days from 130 last year, but increased sequentially from 122 in July. Towable inventory climbed to 106 days, up from 98 last year and 98 in July. Baird reported that 40-46% of dealers say inventory is “too high.”
• Orders: Order plans are better than anticipated in light of retail and inventory trends. Dealers plan to order 4-8% more towables during the next six months, while trimming motorhome orders by just 2-6%.
• 2008 Outlook: Dealers expect 4-6% towable growth and 1-3% motorhome growth in 2008.
• Pricing: Promotional activity remained low as manufacturers appear to have adjusted to the weaker environment.
• Financing: Baird reported that 35% of dealers said that it has become more difficult to obtain financing, nearly unchanged from April (34%). Dealer comments, however, include several stories highlighting challenges for consumers with lower credit scores. If the trend worsens, Baird said there could be a disproportionate impact on the towable market.