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Ingrassia: Dealers Adept at Gauging Demand

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July 17, 2014 by   Leave a Comment

Phil Ingrassia

Phil Ingrassia

Editor’s Note: The following column, authored by Recreation Vehicle Dealers Association (RVDA) President Phil Ingrassia and appearing in the July issue of RV Executive Today, offers a look into how dealers gauge demand for RVs.

One of the things I most admire about RV dealers is their ability to gauge the demand for RVs in their market and then order their inventory to meet that demand.

When I ask dealers how they do it, I get a variety of answers. A little science, a little art, and an advanced degree from the school of hard knocks are common responses.

When I asked about the “science” part of the inventory management equation prior to the recession, several dealers told me they watched local housing starts as an indicator of their market’s economic health.

According to the University of Michigan’s Dr. Richard Curtin, who spoke last month during RVIA’s Committee Week, that indicator may be changing.

Trends in housing starts showed a close relationship with RV shipments until 2009. Since the start of the recovery, the correlation is no longer holding true on the national level. Curtin says this has made housing starts a less reliable indi- cator of trends in RV shipments.

So what is the new indicator? Take a look at car and light truck sales for the past five years. While trends in vehicle sales used to show a weak correspondence with RV shipments, in the past decade, these two trend lines have become nearly identical. (See chart).

Screen Shot 2014-07-17 at 8.58.29 AMSales in the light vehicle segment, especially trucks and SUVs, continue to improve for most automakers. Demand for GM’s new pickup trucks was strong in May. GM sold about 8 percent more Chevy Silverado pickups and 14 percent more GMC Sierras. GMC saw an overall 8 percent increase in sales. Cadillac climbed just over 6 percent, thanks to the Escalade SUV.

At Chrysler, strong demand for Jeep and Ram pickups led the company to its 50th consecutive monthly advance. Jeep sales, fueled by the new Cherokee and Grand Cherokee, increased 58 percent, and Ram pickup deliveries were up 17 percent.

Ford truck sales dipped slightly in May, but analysts said consumers are most likely waiting for the introduction of the all-new 2015 Ford F150 full-size pickup truck later this year. So far, the new F150 is getting good advance reviews for its combination of power and fuel economy. Ford also has a new Super Duty in the pipeline for 2016.

Today’s truck and SUV buyers have a lot of quality vehicles from which to choose, with more coming as automakers say they will continue to invest in new technology to boost power and fuel economy.

This is all good news for an industry dependent on tow vehicles. Of course, Curtin cautions that past performance is no guarantee of future results, but it appears that the corresponding trend lines for light vehicle sales and RV shipments will continue for the foreseeable future.

 

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