Baird: July Coach Report Reflects Soft Market
Editor’s Note: Robert W. Baird & Co. issued a client newsletter following the July motorhome sales report from Statistical Surveys Inc. Excerpts from the Baird newsletter follow.
U.S. motorhome retail demand was down again in July. Motorhome sales fell 6% in July, according to Statistical Surveys Inc. We believe the drop was driven by high gas prices, unfavorable weather and weak consumer confidence. Looking to the back half of 2011, consumers seem less active and dealers are not looking to restock aggressively – likely resulting in fewer RV orders, consistent with our models.
• Motorhome retail registrations in the U.S. fell 6% in July: Class A registrations fell 5%, while Class C registrations fell 8%. High gas prices and low consumer confidence hurt demand.
• Gas/Diesel: Class A-Gas growth (+9%) was more than offset by weak demand for Class A-Diesel units (-21%).
• Retail SAAR: The seasonally adjusted annual rate of U.S. motorhome retail registrations for July before revisions, fell to 17.4K units, from 18.2K units in June. In 2010, U.S. dealers sold 19.5K motorhomes.
• Dealer inventory: Motorhome dealer inventory bottomed a year ago, and in 2010 wholesale unit shipments outpaced retail sales by roughly 6%. Dealers lowered inventory in July, a trend we expect to continue for the balance of the year as dealers manage inventory more conservatively into the off-season.
• Used RV values on the rise: Used RV prices are rising, according to The Black Book. Used motorhomes are up 4% to $42,146, on average. Used towables are up 2% to $10,455. We note that a rise in used prices on Harley-Davidson appears to have spurred better demand as trade-in consumers have something of value to trade. Meanwhile, retail lenders can become more comfortable lending when the underlying collateral is appreciating.
• Dealer convention registrations up: Dealer registrations at the RVDA dealer meetings in Las Vegas Oct 3-7 are up so far.
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.