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RV Industry Sees ‘Release of Pent-up Demand’

Posted By RVBusiness On July 22, 2013 @ 11:37 am In Breaking News | No Comments

Midway through the summer driving season, signs of the U.S. recovery go by in a blur as vacationers ply the byways either driving or towing proud new recreational vehicles.

Investor’s Business Daily reported that shipments of motorhomes jumped more than 30% this year through May versus the same period in 2012, according to the Recreation Vehicle Industry Association (RVIA). Shipments of comparatively less expensive travel trailers rose 11%. Trailers make up a bigger slice of the RV fleet, with sales of 128,037 through May compared to just over 15,000 motor homes.

Most of the units are being bought by dealers to place in inventory, rather than sales to the final owner. Still, the rise in confidence is a welcome change after the industry rolled over early and hard when the economy tumbled. RV sales fell off nearly 50% from peak to trough.

The industry is particularly sensitive to factors such as consumer discretionary spending and rising fuel prices. It “rolled over” before housing and other sectors, and “was in an all-out free fall” by 2006, said Kathryn Thompson, CEO of Thompson Research Group.

“This industry is about as discretionary as you can get,” Thompson said.

Pent-Up Demand

The RV industry started upshifting somewhat in 2010. Sales accelerated in the second half of last year.

“You’re seeing a release of pent-up demand,” said analyst Gerrick Johnson of BMO Capital Markets.

“People who hadn’t bought anything are now replacing (aging RVs),” he said.

Much of that rebound is due to increasing consumer confidence, buoyed by rising home prices and the stock market’s advance to new highs.

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