Baird Survey: RV Dealers Upbeat on Solid 2Q
Summary: Dealers reported that momentum improved as the quarter unfolded, following a slower start, resulting in balanced inventory levels. Dealers expressed anxiety earlier this year as inventory accumulated and spring was slow to arrive – but recent trends appear to have eased fears. Big picture, we remain bullish on retail as a wealth effect releases pent-up demand, but continue to monitor inventory levels now that the restocking effect has largely run its course.
Retail momentum building following late spring. Dealers reported solid growth in motorhomes (+15-20%) and towables (+5-7%) in the April-June period. Relative to preliminary April/May retail data compiled by industry sources (SSI), our checks imply a stronger June as pent-up demand met better weather. “After a mediocre spring, June was our biggest month ever,” according to a Western dealer. A California dealer said, “a lot of pent-up demand is starting to come to the surface.” Used RV prices are improving, which should spur trade-in activity. Still, a growing minority expressed concerns about the economy. “This economy is weaker than people think. It won’t take much to shake it all up again.” Lower price points continue to lead the recovery.
Inventory appears balanced; marginally improved versus spring. Dealer inventory appears balanced, with pockets of both overstocks and stock-outs. Broadly, dealers seem more comfortable with inventory levels relative to our April checks, when higher levels and the late spring stoked fears. Motorhome dealers report 103 days of inventory, essentially flat versus last year (100 days). Some dealers report extended lead time for motorhome deliveries, including Winnebago dealers. Towable dealers report 104 dealers, also consistent with last year (108 days).
Sentiment. The Baird/RVDA dealer sentiment index remains in bullish territory at 61 (1-100 scale) based on current conditions and 72 based on the 3-5 year outlook.
Credit. Credit availability remains solid, but the tailwind from easier credit may be fading. “Credit is fine; we have plenty of flooring and good retail sources,” according to one dealer. Still, the ratio of easier/harder access to consumer credit is more balanced than it has been since the credit cycle began to expand following the recession – a trend worth watching.