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Product Innovation Revs Up RV Industry In ’15

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April 1, 2016 by   Comments Off on Product Innovation Revs Up RV Industry In ’15

Last September's Open House was packed as OEMs showcased product innovation

Last September’s Open House was packed as OEMs showcased product innovation

The RV industry continued to compile fresh benchmarks in 2015, accelerating to its sixth straight year of incremental shipment growth while registering marked retail improvement in key sectors that effectively buried any lingering traces of the recession.

“In terms of U.S. retail sales, 2015 outpaced the Hurricane Katrina years in 2005 and 2006, which had been the high marks since 2003,” said Scott Stropkai, national RV sales manager for Statistical Surveys Inc. (SSI). “Every segment showed growth, and pretty strong growth in many cases.”

Recreation Vehicle Industry Association (RVIA) President Frank Hugelmeyer underscored the gravity of 2015’s shipment totals during the organization’s Feb. 29-March 2 Annual Meeting, stating, “Last year marked the longest period of sustained growth in the past 50 years.” The industry’s overall health received further endorsement during the gathering in Tucson, Ariz., from RV industry analyst Richard Curtin, who foresees shipments reaching 381,100 units in 2016, a 2% increase from 374,246 units in 2015.

Of particular note, that upward trajectory reflects more than just the outside influence of falling gas prices and historically low interest rates that are spurring retail spending. The industry has embraced an “innovate or die” doctrine as OEMs and suppliers are quickly reacting to – and creating – new product trends designed to catch the eye of an increasingly savvy consumer.

Tom Walworth

Tom Walworth

“It was very evident at this year’s Louisville Show that we are witnessing ‘price creep’ in the marketplace and it’s because of the content the OEMs are putting in the RVs,” said Tom Walworth, president of Grand Rapids, Mich.-based Statistical Surveys. “Even in travel trailers, we’re seeing amenities like theater seating and residential refrigerators becoming standard equipment, which was not the case three or four years ago. And because of the competitive nature of the business, manufacturers have to come to market very quickly with these products or they will lose sales.”

Stropkai offered, “While we’re seeing incredible innovation in product, like the side patios and the explosion in the toy hauler sector, the entry-level trailer is still an extremely important piece for OEMs. The industry never walked away from the $10,000 to $15,000 trailer, and that’s important because the segment saw a 27.9% increase in 2015. But the No. 1 towable seller in terms of volume was the $20,000 to $25,000 price point, which indicates consumers are willing to spend more because of the amenities and features that the OEMs are offering.”

Robert “Mac” Brian, newly appointed as senior vice president, finance and operations for RVIA, agreed that the industry’s “incredible ability to respond to consumer demand” factored heavily into last year’s growth. But he also identified another trend that boosted wholesale numbers.

“For the second year in a row we saw fourth-quarter shipments, which are traditionally the weakest period, exceed the third quarter,” he said. “That’s the first time that’s happened in 40 years. It’s a trend that could be significant in the long-term because when we end the year strong it acts as a catalyst for the following year. And while we don’t have any definitive data, it’s also an indication that inventories are well managed, which means the industry is doing what it has to do in order to keep pace with demand.”

The lone blip coming out of 2015 was a dropoff in the Canadian RV market as the country endured a “double whammy” with the effects of a devalued dollar exacerbated by diving commodity prices – a market that touched off a significant boon for the economy with the exploration and subsequent mining of oil sands.

Scott Stropkai

Scott Stropkai

“There’s no doubt the market was down,” said Stropkai, noting overall registrations dropped 12.86%, pulled down by a 29% decline in the motorhome segment. “But even though sales were off almost 13%, Canada still sold more RVs than in 2010. And there were pockets that did OK, like Ontario, which was only down 3.4%.”

Several positive reports also emerged from the early 2016 show circuit, including the Canadian Recreational Vehicle Association’s (CRVA) Feb. 25-28 Toronto Spring Camping & RV Show and Sale which posted record numbers for attendance.

“I have heard that things are picking up this year, although I can’t confirm that with any numbers,” said Stropkai. “Manufacturer reps told me that attendance has been up at the majority of the events they have been working this year.”

For the market as a whole, perhaps the most encouraging facet from retail and wholesale performance in 2015 is that gains were essentially across-the-board.

Consider:

• RVIA reported that overall RV shipments in 2015 recorded a 4.9% increase over the previous year.

  • Towables shipments advanced 4.5% year-over-year, driven by another strong performance in the travel trailer segment which ended 2015 up 7.5% with 239,225 units shipped.
  • Motorhomes shipments grew 7.6% with Class C’s rising 15.8% from a year ago and Class B coaches enjoying a 9.8% upswing. The Class A sector was flat for the year, up 0.2%.
  • SSI reported that travel trailer sales climbed nearly 21% for the year as towables rolled to a 17.4% increase with all segments recording gains in 2015.
  • Motorhome sales jumped 16.1% in 2015 with Class A’s showing 12.4% growth and Class C’s up 20.5%. The Class B segment also posted solid year with a 12.3% year-over-year increase.
Mac Bryan

Mac Bryan

Bryan said that while the industry continues to be driven by the high-volume travel trailer sector,  there are several emerging trends indicating that consumers are being drawn back to motorized products.

“If you go way back, motorhomes and towables were around 50-50 in terms of overall units,” he said. “That obviously hasn’t been the case for some time for several reasons. Emission issues put pressure on motorhome prices, and, of course, fuel costs and interest rates have been a huge factor. But those issues have tempered, and the buyer is coming back.

“We saw the most movement in the Class C and Class B motorhomes where there has been a lot of product diversification. I think we are really seeing the impact of the European chassis as the manufacturers are taking advantage of the smaller platforms, which seem to be quickly gaining ground with consumers. It’s exciting what is happening in those segments. I am also encouraged by the strength of the Class A market, including a push by gas units into the larger chassis, which has traditionally been owned by the diesel coaches.”

Walworth confirmed that Class A sales were on the rise, as the sector posted its best year since 2007. “It’s a great indication for the industry as a whole because that market went away for a period of time. Again, it has a lot of do with the OEMs building units that really zero in on the consumer.”

Working in tandem with progressive product development, the industry continues to attract new buyers while extending the ownership cycle within its core Baby Boomer demographic.

“The peak for the Baby Boomers was 1957, so that age group is going to be fueling our industry for a number of years as people move into retirement,” said Walworth. “After that, you have the Xers which have similar tastes to the Boomers. The Millennials are kind of a wild card right now, but the industry will figure them out.”

Bryan offered, “Flexibility is important to the Millennials. They tend to rent instead of buying cars or homes, but I think that really is tied into the urbanization of America with more young people migrating to the larger cities and outlying suburbs. But the good thing is that they haven’t lost the desire to be outdoors. They like experiences, and RVing certainly provides the ideal outlet.”

The key driver in recruitment continues to be the Go RVing Coalition, which is perpetually honing its message while keeping pace with technology and consumers’ reliance on mobile devices.

“The Go RVing campaign has been the backbone behind the industry’s success,” said Stropkai. “It just kept rolling along, even during the downturn. And it’s still changing and adapting. I’m glad the industry continues to give as much support as it does to the campaign.”

While 2016 seems to be headed for another year of growth, the dynamics may be in place to carry that trend for the next several years.

“Things do look good for 2016 and beyond,” said Stropkai. “It’s like a roller coaster – you just climb, climb, and climb until you get near that peak, and then maybe you hang over the edge for a few years. I really don’t see a downturn this year or for the next couple years.”

Bryan added, “Over time, price of gas will go up as will interest rates, but there is nothing on the horizon that would dramatically change our current equation,” Bryan said. “I think we are going to experience slow, steady growth ahead. We’ll just see how much higher we can go.”

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