South Dakota RV Dealers Look for Rebound
American families are ready to hitch up their trailers and tow the RV industry out of its worst stretch in nearly two decades.
The industry was driven into the ditch in 2009 by the recession. Sales plunged, plants closed and thousands of jobs were cut as orders for recreational vehicles dropped to their worst level since 1991.
But now, RV makers are starting to turn profits and have begun to hire, the Rapid City (S.D.) Journal reported.
And dealers — including those in the Black Hills — are ordering more RVs for their showrooms. This year, shipments of RVs ranging from entry-level popups to spacious motorhomes are expected to hit their highest level since 2007, when the economic downturn began.
Mid-States Campers, in Summerset at Exit 48, just placed an order for $2 million in inventory, salesman Danny Watt said.
“We’re predicting it’ll be a good year,” the dealership’s manager, Craig Wachendorf, said.
He said 2010 sales were back to prerecession levels, and he predicts about 10% growth in 2011 in sales of fifth-wheel and towable campers, with steady sales over 2010 in the more expensive motorhomes.
That’s the trend around the country.
A growing share of RV sales comes from families choosing less expensive towable RVs, including folding camping trailers, or popups. Those towables are smaller and cost a fraction of the price of amenity-filled motorhomes favored by older travelers.
Before the recession hit, towables accounted for eight out of every 10 new RV shipments. Now they make up about nine out of 10 RVs shipped to dealers.
Towables, attached to pickups or hitched to the back of another vehicle, cost between $4,000 and $100,000, according to the Recreation Vehicle Industry Association (RVIA). Stand-alone motorhomes can start at about $41,000 for van-like RVs, according to the industry group, while spacious, bus-like vehicles can run as much as $400,000 for top-of-the-line models.
And that’s before the cost of gas. Big RVs can get as little as 8 miles per gallon.
Bob Olson, CEO of RV manufacturer Winnebago Industries Inc., said a trend of families buying cheaper towables is encouraging.
“They have to start somewhere. And one thing about this lifestyle, you get hooked on it and you want to upgrade,” he said.
The industry is forecasting some recovery across all RV models. It expects shipments from manufacturers to dealers to hit 236,700 in 2010, up 43% from 2009’s nearly 20-year low of 165,700. In 2011, shipments are forecast to reach 246,000.
Higher shipments mean dealers expect retail sales to rise. The two don’t always correlate, but there are signs that sales will, in fact, grow in the mid-single digits in 2011 “with a bias toward cheaper units,” said Bret Jordan, who follows RV companies for Avondale Partners.
“It correlates pretty well with consumer confidence and economic improvement,” he said.
Still, this year’s pace of shipments remains far below the 2006 level of 390,560 — the high-water mark for a quarter century.
And speed bumps remain. Many consumers remain wary of big-ticket purchases and many RV owners have delayed trading in older models for bigger ones. Credit isn’t as nearly free flowing as in prerecessionary times.
Service departments have seen steady work as RV owners held onto older models. Donna Maloney, general manager at Dakota RV at Interstate 90 and Deadwood Avenue, said, “People were keeping what they had longer.”
Motorhome sales are still sluggish, she said.
“The people that can afford the motorhomes did get hit the hardest,” she said, speaking of older consumers who saw their nest eggs take a hit. “I’m guessing it’s taking them longer to come back.”
But sales of fifth-wheels and trailers have rebounded, she said.
“People that RV, they’re not going to give up their toys and their fun,” Maloney said.
Even today’s small models feel luxurious, with amenities such as king-sized beds, wood cabinets, flat-screen televisions and residential-style lighting fixtures common even in fifth-wheel trailers. Other “toy-hauler” models feature rear garages with covered space to store motorcycles, snowmobiles or four-wheelers, space that converts to a party deck when the vehicles are unloaded, Watt said.
With modern kitchens including refrigerators, stoves, microwaves and more, even in the smaller models, “They’re not having to rough it,” Maloney said.