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Baird: Weather Was Severe February Headwind

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April 13, 2011 by   Leave a Comment

Baird logoEditor’s Note: Robert W. Baird & Co. issued a client newsletter following the release of the February motorized RV sales report by Statistical Surveys Inc. (SSI). Excerpts from the Baird newsletter follow.

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U.S. motorhome demand falls in February. Motorhome sales fell 15% in February, according to Statistical Surveys, but Winnebago (+13%) and Thor (+3%) fared better. We believe weather was a headwind in the month. We continue to like the macro backdrop for RVs (wealth effect, tax policy, consumer confidence) and expect credit to loosen, supporting stronger demand in 2011. Conversations with industry participants support this outlook, with gas prices and dealer inventory among key concerns.

Summary

Motorhome retail registrations in the U.S. fell 15% in February. Class A registrations decreased 11%, while Class C registrations dropped 21%. Severe winter weather was a headwind to retail sales in the month. Note that Winnebago has already reported implied retail sales up 22% for its quarter ended February.

Gas/Diesel. Class A-Diesel registrations fell 31% while Class A-Gas registrations increased 13%.

Retail SAAR. The seasonally adjusted annual rate of motorhome retail registrations for February before revisions, fell to 16.2K units, from 17.5K units in January. In 2010, U.S. dealers sold 19.5K motorhomes. The pace is slower than we anticipated, but off-season trends can be misleading.

Dealer inventory. Motorhome dealer inventory bottomed a year ago, and in 2010 wholesale unit shipments outpaced retail sales by roughly 6%. Dealers continued to restock inventory in February ahead of the selling season, ordering 1,900 units and selling 1,200 units in the month.

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 ckennison@rwbaird.com.

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