Baird: Demand Weakens in Latter Half of 2011
Editor’s Note: Robert W. Baird & Co. issued a client newsletter following the August shipments report from the Recreation Vehicle Industry Association (RVIA). Excerpts from the Baird newsletter follow.
Shipments down again in August. Total RV shipments fell 3% in August on weak motorhome results (-23%) and relatively flat towables (-1%). Facing an uncertain economy and sharp drop in consumer confidence in August, consumers seem less likely to buy and dealers are less likely to stock – leading to slower RV orders in the back half of 2011.
• Total August RV shipments down 3%. Overall trends improved slightly following a weak July (-9%), but have deteriorated significantly from the 8% growth seen in the first half of 2011. Following seasonal restocking in the first half, retail failed to recover and dealers have slowed orders. 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 1%. Travel trailer shipments improved 1% in August, while fifth-wheel shipments fell 4%.
• Motorhome shipments fell 23%. Class A shipments fell 15% in August, while Class C shipments dropped 33%. For perspective, we model Winnebago shipments to drop 18% in the August quarter, which compares to industry shipments which fell 14% in the same period. Winnebago reports results October 13.
• SAAR. We calculate a seasonally adjusted annual rate of shipments. The SAAR of motorhome shipments decreased to 20.4K units in August, from 21.9K units in July (23.6K units were shipped in 2010). The SAAR of towable shipments increased to 205K units in August, from 183K units in July (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.