Baird: Tight Inventory Levels Hurt July Shipments
Editor’s Note: Robert W. Baird & Co. issued a client newsletter following the July shipments report from the Recreation Vehicle Industry Association (RVIA). Excerpts from the Baird newsletter follow.
Shipments down in July. Total RV shipments fell 9% in July — the largest monthly decline since 2009 — on declines in both motorhomes (-11%) and towables (-9%). Following seasonal restocking at dealerships in the first half, and a slower-than-expected retail recovery through the selling season, dealers seem reluctant to accumulate inventory.
• Total July RV shipments down 9%. Overall shipment trends have deteriorated following flat shipments in June and a stronger May (+14%). As seasonal restocking ends and retail trends have slowed, orders have moderated. Recall that dealers reduced inventory during the last cycle, limiting the destocking pressure if retail lags. In our recent dealer survey, dealers indicated plans for modest growth in orders for the back half of 2011.
• Towable shipments down 9%. Travel trailer shipments dropped 13% while fifth-wheel shipments grew 5%. Year-to-date towable shipments are up 4%. For perspective, Thor has reported preliminary results for its quarter ended July. We model Thor towable shipments down 7.5% (excluding Heartland), versus industry shipments up 3% in the quarter.
• Motorhome shipments fell 11%. Class A shipments fell 10%, while Class C shipments dropped 13%. We continue to expect pressure on shipments in the second half, as dealers seem reluctant to stock heading into winter, but note that comps become easier beginning in fall. Year-to-date motorhome shipments are up 6%. For perspective, we model Winnebago shipments to drop 18% in its August quarter. Through the first two months of the quarter, industry shipments are down 10%.
• SAAR. We calculate a seasonally adjusted annual rate of shipments. The SAAR of motorhome shipments decreased to 21.9K units in July, from 23.3K units in June (23.6K units were shipped in 2010). The SAAR of towable shipments fell to 183K units in July, from 243K units in June (199K 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 email@example.com.