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RVIA Seminar: Credit Crunch Not Going Away

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March 12, 2009 by   Leave a Comment

There are plenty of efforts being made at the national and state level to improve RV sales, representatives of various companies in the business were told Wednesday (March 11) at the Century Center in South Bend, Ind.

But, according to a report in the South Bend Tribune, there is still plenty of work to be done.

Rob Snow, the main speaker at a seminar hosted by the Recreation Vehicle Industry Association (RVIA), told the audience about the problems of the Term Asset-Backed Loan Facility (TALF) and TARP (Troubled Assets Relief Program) and how the programs have not really loosened up credit so much.

But there are things the industry needs to do to help itself in its interaction with congressional leaders and banks, he said in an interview after his talk.

“You need to educate them on the RV product,” said Snow, a founding member of Carillon Capital Partners in Washington, where his company serves the financial services industry. “You need to teach them that this is a strong place to invest the money and that you can make a reasonable return by doing it.

“It’s trying to bring (RV) financing into a mainstream credit product which it has not been historically,” he said.

According to the Tribune, Snow said he does not see the credit crunch loosening up anytime soon. And he even suggested RV companies might want to band together and create their own financing machine.

“I don’t see credit freeing up for 12 to 18 months because there is such an issue with asset values,” Snow said. “And when you look beyond the RV industry and there are other asset classes such as commercial mortgages that are just starting the downturn.

“And to the extent that you have instability and continued asset write-downs and banks with capital challenges, they are not likely to come back to the market. So you really need that stability and some of the assets to flush through the system to make it work.”

The industry is going to change a lot, he said.

“There are going to be survivors and folks that don’t survive both in the manufacturing and dealer level,” Snow said.

But if the industry was a patient, its condition would not be “critical,” he said.

“I don’t know that it’s critical because the demographics are still strong,” he said. “There are still people out there who want RVs, people who are committed to the lifestyle.

“So it’s (the market for RVs) not going to go away, but it’s going to re-size.”

Kip Ellis, vice president of sales and marketing for Atwood Mobile Products in Elkhart who attended Snow’s session agrees that the industry has taken steps.

“But it really kind of falls to these banks,” he said. “It’s kind of a PR thing at the moment. Kind of with the broader economy, these banks are kind of holding tight on their capital as these guys have mentioned.

“Until we see some movement in that area, until the banks step up and we actually get new lenders to this industry, it’s going to be a struggle.”

He is both optimistic and realistic about its future.

“Obviously, it’s going to be an industry that survives,” he said. “The demand from the retail side continues to outpace the wholesale.”

And the attendance at RV shows so far this year has been encouraging, he said.

“It’s just a matter of getting people credit and fulfilling some of that demand,” Ellis said.

The general consensus is that credit will soften in the second half of the year, Ellis said.

But the first part of the year is generally the strongest part of the year for RV manufacturers in terms of shipments and preparation for the selling season, he said.

“It seems like it could be too late for that,” he said.

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