Baird: Healthier Levels for Dealer Inventories
Editor’s Note: Robert W. Baird & Co. issued a client newsletter following this week’s release of the year-end wholesale RV shipments. Excerpts from the Baird newsletter follow.
Strong December shipments close out solid 2010. Total RV shipments increased 24% in December (+48% in 2010), as motorhome shipments increased 20% (+97% in 2010), while towable shipments grew 24% (+44% in 2010). Shipments had slowed recently, but improved in December as dealers replenish inventory ahead of the spring season. Heading into 2011, the most recent RVIA forecast calls for RV wholesale growth of 4%.
Total RV shipment trends improve in December. Overall shipments grew 24% in December (+48% in 2010), above flat-to-down wholesale growth in recent months. Shipment growth decelerated through late summer and into fall as retail slowed and dealers managed inventory levels into the slower winter season. Comps remain difficult, but strong wholesale results indicate dealers are replenishing inventory ahead of the spring selling season which begins this March/April. With dealer inventories back at healthy levels, retail results should drive shipments going forward, as dealers restock inventory on a 1:1 basis.
Motorhome shipments increased 20% (+97% in 2010). Class A shipments increased 22% while Class C shipments increased 17%. We expect motorhome shipment growth remain modest against difficult comps, with possible upside from better retail results.
Towable shipments up 24% (+44% in 2010). Travel trailer shipments increased 24% and fifth wheel shipments also increased 24%. Strong towable results follow three consecutive months of towable shipment declines, despite difficult comps. We believe dealers are more optimistic heading into 2011, and are able to restock new units following a right-sizing of inventory levels in 2010.
SAAR. We calculate a seasonally adjusted annual rate of shipments. The SAAR of motorhome shipments increased modestly to 24.0K units in December, from 23.0K units in November — 23.6K units were shipped in 2010. The SAAR of towable shipments increased dramatically to 229.7K units in December, from 172.7K units in November — 199.2K units were shipped in 2010.
This summary of a Baird research report is not intended as investment advice. To participate in Baird surveys and receive research reports, contact Craig R. Kennison, CFA, at firstname.lastname@example.org.