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Accelerating RV Sales ‘Good Sign’ for Economy

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June 6, 2013 by   Leave a Comment

The recent acceleration in car sales is impressive, but there’s an even better sign the U.S. economy is getting back on track: surging sales of recreational vehicles. Bloomberg Business Week reported that makers of RVs shipped 32,054 machines in the U.S. in April, a 19% increase from a year earlier, according to data compiled by the Recreational Vehicle Industry Association (RVIA).

RVs are a notable niche because it takes no small amount of consumer confidence to buy a gas-guzzling home on wheels. Between 2007 and 2009, more than half of the RV market disappeared. Light-vehicle sales, by contrast, dropped by 36%. “No one needs an RV,” said Jeff Tryka, a spokesman for Thor Industries Inc., one of the biggest U.S. RV makers. “It’s a purely discretionary purchase, while there’s always going to be a base-level demand for cars.”

The motorhome and towable RV business, a $14 billion market in the U.S., is on track for its best performance since 2007. For the year to date, shipments are up 13% and RVIA expects more than 307,000 vehicles to roll by January. The sales boost doesn’t matter much to Detroit, but it’s big news about 200 miles away in Indiana, where roughly half of the country’s RVs are made. It’s also great for companies like privately held Jayco Inc., the Forest River Inc. unit of Warren Buffett’s Berkshire Hathaway, and Thor, which cranks out some of the most popular RV brands.

When the RV market bottomed out in 2009, Thor’s payroll dropped to 5,400 workers; today it employs 8,800. And in anticipation of higher demand, it just bought a factory in Wakarusa, Ind., equipped with 35 booths for painting giant campers. The company will give a progress report when it announces earnings later today. Last quarter, Thor posted income of $19.9 million—a 45% increase from a year earlier.

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