The ongoing recession and tight credit will continue to affect RV sales in 2009, according to the latest research of economist Richard Curtin, director of Consumer Surveys at the University of Michigan.
In his Summer issue of Roadsigns, which is prepared for members of the Recreation Vehicle Industry Association (RVIA), Curtin said RV shipments are expected to decline to 136,500 units this year. While this estimate is well below his forecast of 186,600 issued last November, it is a slight improvement from his forecast that appeared in the Spring 2009 Issue of Roadsigns, when he estimated total shipments this year would retreat to 130,100 units
Curtin will expand upon his latest forecast as one of the featured speakers at RVIA’s Committee Week, which gets underway today in Washington, D.C.
“They (shipments) reached a lowpoint in the first quarter of 2009, and can be expected to begin posting small seasonally adjusted gains in the balance of 2009 and into 2010,” Curtin stated. First-quarter shipments totaled 30,400, off 63% from the first quarter of 2008.
“The gains will be focused on conventional travel trailers during the next year or so, although all types of RVs will improve,” he said.
Further, he stated, “The recession is expected to end by the close of 2009 due to the favorable impact of the stimulus package and the revival of more normal credit conditions. Unfortunately, the recovery is expected to be abnormally slow. The economic outlook still remains quite uncertain, which has clouded prospects for the RV industry as well.”
“The pace of the recovery in RV sales,” Curtin continued, “will be slowed by the shift in priorities among consumers away from spending and toward debt repayment and the building of savings and reserve funds, including their diminished retirement accounts. Although credit will not be as free-flowing as in the past, RV buyers are excellent credit risks and can be expected to return to the market.”
By segment, Curtin offered these shipments forecasts for 2009:
- Travel trailers, 82,600.
- Fifth-wheels, 29,500.
- Folding camping trailers, 10,900.
- Truck campers, 2,000.
- Class A motorhomes, 5,400.
- Class B motorhomes, 900.
- Class C motohomes, 5,200.
Uncertainty Clouds RV Forecast
Curtin concluded with the observation that his forecast bears some uncertainty. He said, “When the economy finally reaches the bottom of its cycle, the initial phase of the recovery is typically anticipated to be as rapid as the descent into recession. That’s a natural assumption since it mirrors the typical cyclical pattern of the past.
” The current recession, however, is hardly typical as it involved a virtual freeze of credit markets and the deepest and longest decline in production and income during the past half century. The full restoration of normal credit flows will be a painstakingly slow and uneven process.
“Moreover, the impact of the new financial regulations, which are as yet largely undeveloped, will continue to add uncertainty to financial markets and lenders. While RV shipments are forecast to be 136,500 in 2009, the range about this forecast is unusually large, plus or minus 15%, with a comparable range for all various types of RVs covered in this forecast.”
The University of Michigan also prepares a monthly report on Consumer Confidence, which took a big jump in May, according to the report.
In the current economic environment, the prospects for the upcoming year will be a prime focus of RVIA Committee Week next week (June 8-11) at the Willard InterContinental Hotel in Washington, D.C.
For one thing, economist Richard Curtin of the University of Michigan will present his 2010 retail sales forecast. “A lot of people are going to be interested in hearing what Dr. Curtin has to say,” said Richard Coon, president of the Recreation Vehicle Industry Association (RVIA).
About 170 people representing manufacturers, dealers and suppliers will attend the four-day meeting two blocks from the White House that will culminate with an RVIA board meeting Thursday during which it is expected that the future of the September retail California RV Show in Pomona and the December National RV Trade Show in Louisville, Ky., will be high on the agenda.
“RVIA’s principal sources of revenue come from the Louisville and Pomona shows,” RVIA Chairman James Sheldon told RVBUSINESS.com. “Louisville will probably only be about two-thirds of what it was last year and the Pomona Show probably is going to be a third of the size it was last year.”
Although RVIA’s 2010 budget won’t be set until a board meeting in September, finances need to be addressed sooner than that, Sheldon said.
“One of the most critical issues we face as an association is how we fund the myriad of services we provide our members and still maintain the level of quality and responsiveness,” he said.
The board is likely to consider raising the cost of the RVIA seal which is affixed to towables and motorhomes that RVIA members build to let buyers know that they meet the association’s construction standards.
“The board is going to have to address the issue of our expenses exceeding our revenue,” Sheldon said. “We are rapidly burning through our reserves. This is going to test our mettle, but I have confidence that we will come up with the right answers to address these issues.”
Sheldon said that RVIA is sensitive to the state of the economy and the fact that many of its members face severe financial challenges. “We have to be very judicious about how we approach that subject so that we don’t harm the members in the process,” Sheldon said.
Seals currently cost $4.05 each with a $46 to $74 assessment added to each for the Go RVing market expansion campaign. Although Go RVing’s media budget has been trimmed from a high of $15.5 million in 2007 to $3.5 million this year, Coon said he doesn’t expect that the Go RVing assessment will be increased. “There might be some talk, but the proposal to do that didn’t fly with the board during the last board meeting (in March),” Coon noted.
Another major topic of discussion will be proposed franchise laws that have been wending their way through nearly two dozen state legislatures backed by state RV dealer associations. Although primarily aimed at protecting auto dealers from forced closures by auto manufacturers, most piggyback RV dealers and would require that RV manufacturers buy units back from dealers without cause, similar to a law in Texas that has been on the books for more than a decade.
“Most manufacturers feel this provision in the law in the various states is unfair,” said Sheldon, special assistant to the president of Monaco RV LLC. “It could become the most important issue that our industry faces. It literally could bring every RV company down to its knees.”
Sheldon said the RVIA board is expected to consider backing franchise legislation that applies specifically to the RV industry, a position it has taken in the past with only limited success.
During Committee Week, Sheldon will host the Chairman’s Luncheon on Monday to honor the service of Atwood’s Carl Pfalzgraf as chairman from 2006 to 2008, while Curtin will present his 2010 forecast during the Annual Membership Meeting during lunch Tuesday which will also will include reports on the state of the association from Sheldon, Curtin and Treasurer Don Walter.
The industry-wide Go RVing Coalition will meet Monday afternoon, and RVIA standing committees will meet Monday and Tuesday to act on recommendations that will be passed on to the board for consideration during its Thursday meeting.
Then, on Wednesday RVIA members will meet with federal legislators and their staffs for the 7th Annual Advocacy Day to discuss legislative issues.
Recreation Vehicle Industry Association (RVIA) members will meet to plan the association’s agenda for the next fiscal year and beyond at Committee Week, set for June 8-11 at the Willard InterContinental Hotel in Washington, D.C. During the four-day event, the association’s standing committees, executive committee and board of directors will meet to develop strategies and programs for the upcoming fiscal year.
The Go RVing Coalition and Committee on Excellence are also scheduled to meet in conjunction with Committee Week on Monday, June 8.
“Committee Week is one of the association’s most important events,” said RVIA President Richard Coon in a news release. “The work done during the week charts the course for RVIA for the next year. Especially in the current challenging times, it is important for RVIA’s many committed and talented committee members to gather and discuss the association’s next steps.”
On Monday, June 8, Committee Week participants will gather for a Chairman’s Luncheon to honor Carl Pfalzgraf’s service as chairman of the board from 2006 – 2008.
Since RVIA’s annual meeting was canceled due to economic conditions, the membership meeting will be a featured event at Committee Week this year. The two-hour luncheon program will be held Tuesday, June 9, and will feature Richard Curtin, director of consumer research at the University of Michigan. Curtin will give his projections for the RV industry for the upcoming year. Coon will also present his views on the association and the industry.
Most committee meetings are open to guest attendance; however anyone planning to attend a meeting for a committee of which they are not a member should contact the RVIA staff liaison or the committee chairman for information on the guest policy.
Committee Week is once again taking place at the historic Willard InterContinental, located just two blocks from the White House in the heart of Washington, D.C.’s business district.
For more information about Committee Week or to register for the event, contact Doreen Cashion in the Meetings and Shows Division at (703) 620-6003 (324) or email@example.com.