Baird Q3 Survey: RV Retailers Add to Inventory
Editor’s Note: Robert W. Baird & Co. conducted a survey of over 100 RV dealers to assess recent trends during the third quarter. The following offers a summary of the results.
Dealers place strong orders. We contacted over 100 RV dealers to assess recent trends. After de-stocking for years, dealers have a healthy appetite for inventory, betting on better retail. Big picture, we believe used prices have bottomed, stimulating trade-in demand. Towable retail is healthy, but inventory is higher; motorhome demand is softer, but dealers want more inventory.
• Traffic and retail mixed but trending better. Traffic improved, but deteriorated as the quarter unfolded and the season comes to a close. Dealers reported mixed results that point to renewed consumer interest in the RV space. Towable demand improved 8-12%, according to dealers we contacted, but motorhome retail was closer to flat. Still, we believe the motorhome market is poised to recover as trade-in values bottom.
• Inventory – towables balanced, but motorhomes lean. After de-stocking for years, dealers have a strong appetite for more inventory – especially in motorhomes. Dealers report just 83 days of motorhome inventory, down from 111 last year, and 115 days of towables, down from 116 days. Our sense is that towable inventory is “balanced” today, while motorhome inventory is still “lean.”
• Orders look strong as dealers bet on better retail. Dealers plan to order 8-12% more towables and 15-20% more motorhomes, indicating the long de-stocking cycle is over. As consumer confidence improves, dealers are betting that consumer demand will recover, supporting the bet on inventory. Good deals at the Elkhart Open House (where some manufacturers covered floorplan costs through the winter) supported strong orders. Most dealers (68%) considered Elkhart promotions “the same” as last year.
• Sentiment remains high – but election looms. Dealer sentiment remains high – an encouraging sign. However, most dealers would prefer Gov. Romney over President Obama when asked which candidate is better for their business.
• Outlook. Industry fundamentals have improved as trade-in demand recovers and dealers re-stock inventory to meet demand. But with tax policy up for grabs, a sputtering economic recovery, and dealer inventory back in balance, we are more sensitive to valuation. We remain optimistic about the recovery – but would harvest gains while optimism reigns, noting that opportunities to become more aggressive often present themselves.
Please contact your Baird representative for a complete copy of the dealer survey.