Editor’s Note: The following release, contained in the fall issue of Roadsigns, comes courtesy of the Recreation Vehicle Industry Association (RVIA) based on research by Richard Curtin from the University of Michigan.
RV Shipments totaled 76,000 units in the second quarter of 2010, the largest year-to-year gain the past quarter century. The outsized increase followed record-setting declines due to the recession and credit freeze. The second quarter gains were shared by travel trailers and motorhomes, while folding camping trailers and truck campers posted more modest increases.
The rapid pace of increase will moderate during the year ahead. Total shipments are expected to reach 239,000 in 2010 and 259,600 in 2011. On a seasonally adjusted basis, RV shipments will slow in the second half of 2010 and then rebound by the end of 2011. It will take one year for the seasonally adjusted total to again equal the level recorded in the second quarter of 2010.
(As the towable RV market has improved, Curtin has repeatedly upgraded his 2010 year-end forecast each quarter from 169,500 units in mid-2009 up to 185,800, 203,500, 215,900 and 230,300 earlier this summer — a 39% gain over 2009’s total shipments of 165,700. The industry shipped 237,000 units in ‘08.)
RV sales face continued challenges from the slowdown in prospects for economic growth. Uncertainty about future taxes, depressed home values and tight credit conditions will restict motorhome sales, and lackluster income growth and high unemployment will limit gains in folding camping trailers and truck camper sales.
Conventional and fifth-wheel travel trailers are expected to maintain their 83% share of the RV market, while motorhomes will account for 10% of the total. The trailer share us up by 20 percentage points from a decade ago, half coming from folding camping trailers, a close substitute, and half from motorhome sales.
Downsizing Versus Rightsizing
The Great Recession has been followed by a recovery only an economist could recognize. Lackluster economic growth, falling wages and high unemployment do not signify a recovery to most people. Importantly, consumers have come to expect that dismal economic prospects will persist for years to come. These new constraints have caused consumers to reconsider their spending and saving habits. Postponement works well to bridge a brief recession, but a more thorough rightsizing of consumption is required when the slowdown is expected for an extended period. Given the strong underlying demand for the RV lifestyle, consumers will gravitate toward products that offer an equivalent experience at a price that meets their new budget constraints. Downsizing will not be as successful as rightsizing RVs. Rightsizing means delivering the optimal mix of size, convenience and features to meet the new constraints facing consumers. While the challenges in developing new products will be as great as the economic hurdles now facing the industry, rightsized RVs will reap the long-term payoff from consumers.
Richard Curtin has revised upward his already optimistic forecast for wholesale RV shipments for 2010.
His latest forecast, appearing in the Summer issue of RV Roadsigns, predicts shipments will total 230,300 units this year, a 39% gain over 2009. RV Roadsigns is published quarterly by the Recreation vehicle Industry Association (RVIA).
In February, he forecast shipments in 2010 would total 215,900 units, a 30% increase over 2009. In December, Curtin projected 2010 shipments to reach 203,500 units. That was a step up from Curtin’s previous 2010 prognostication of 185,800 units and, before that, 169,500 units, the last of which was issued last June.
Curtin will be speaking on Wednesday (June 9) at a luncheon in the Century Center in South Bend, Ind., as part of the RVIA’s Committee Week.
Here is Curtin’s latest forecast:
“Total RV shipments rose to 59,900 in the first quarter of 2010, up from just 30,500 a year ago. This year-to-year gain in shipments was 96%, the largest ever recorded. The extraordinary gain was widely shared by conventional and fifth-wheel travel trailers, as well as all types of motorhomes.
“RV shipments are expected to total 230,300 in 2010, an anticipated gain of 39% above the 2009 total of 165,700 units. The expected percentage gain will be the largest for Class A and Class C motorhomes, closely followed by conventional and fifth-wheel travel trailers. While the initial surge in shipments was due to restocking depleted dealer inventories, sales of RVs to consumers will also improve in 2010.
“The industry is firmly on the road to recovery, although the overall pace of progress will slow in the second half of 2010. While improved, job and income growth will remain subdued, and the availability of credit will slowly improve in the year ahead. Volatility in financial markets, lackluster trends in home prices, and prospects for higher inflation, interest rates and taxes in the year ahead will keep consumers in a defensive spending posture. The lingering effects of the economic downturn on the lower end of the RV market will push shipments of folding camping trailers and truck campers as a share of the total market to the smallest level on record.”
Curtin’s forecast includes the following category shipment figures:
- Travel trailers, 140,600.
- Fifth-wheels, 50,000.
- Folding camping trailers, 14,700.
- Truck campers, 2,400.
- Class A motorhomes, 11,200.
- Class B motorhomes, 1,600.
- Class C motorhomes, 9,800.
The New Normal
“A recovery that is slower and more variable will be the new normal for the RV industry. This means that keeping inventories in line with sales is both more important and more difficult than during past recoveries. It is more important since a costly mismatch between inventories and sales is more likely when variations in the pace of upward market growth are more common. It is more difficult to assess given the wide array of economic, financial and new regulations that will influence market trends in our increasingly globalized economy. Inventory management is about timing, and poor timing means either lost profits or lost sales. There is no doubt that it was necessary to restock depleted dealer inventories in advance of renewed strength in retail sales. A customer centric approach is now required, however, to closely align production with sales so as to provide the right selection of RVs at the right locations at the right time. The financial health of the entire industry, including manufacturers, suppliers and dealers, depends on the deployment of advanced inventory management techniques.”
RV Roadsigns is published quarterly and available to RVIA members at a password-protected link. Those who aren’t RVIA members can subscribe to the newsletter in the RVIA Store at www.rvia.org. Richard Curtin is affiliated with the University of Michigan Consumer Survey Research Center.
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.