Midway through the summer driving season, signs of the U.S. recovery go by in a blur as vacationers ply the byways either driving or towing proud new recreational vehicles.
Investor’s Business Daily reported that shipments of motorhomes jumped more than 30% this year through May versus the same period in 2012, according to the Recreation Vehicle Industry Association (RVIA). Shipments of comparatively less expensive travel trailers rose 11%. Trailers make up a bigger slice of the RV fleet, with sales of 128,037 through May compared to just over 15,000 motor homes.
Most of the units are being bought by dealers to place in inventory, rather than sales to the final owner. Still, the rise in confidence is a welcome change after the industry rolled over early and hard when the economy tumbled. RV sales fell off nearly 50% from peak to trough.
The industry is particularly sensitive to factors such as consumer discretionary spending and rising fuel prices. It “rolled over” before housing and other sectors, and “was in an all-out free fall” by 2006, said Kathryn Thompson, CEO of Thompson Research Group.
“This industry is about as discretionary as you can get,” Thompson said.
The RV industry started upshifting somewhat in 2010. Sales accelerated in the second half of last year.
“You’re seeing a release of pent-up demand,” said analyst Gerrick Johnson of BMO Capital Markets.
“People who hadn’t bought anything are now replacing (aging RVs),” he said.
Much of that rebound is due to increasing consumer confidence, buoyed by rising home prices and the stock market’s advance to new highs.
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Editor’s Note: Robert W. Baird & Co. recently partnered with the Recreation Vehicle Dealers Association (RVDA) to contact 146 RV dealers regarding demand during the second quarter. The following is a summary of the results.
Solid industry trends continue. Dealers indicated that peak-season trends are very strong – particularly in motorhomes. Retail demand was robust – new motorhome demand jumped 28% while new towable demand improved 11%. Meanwhile, inventory is lean-to-balanced and dealer sentiment remains high, leaving manufacturers well-positioned as the evaporation of negative equity spurs new retail demand. We remain bullish on fundamentals and would look to add on weakness.
Peak-season strength. Dealers reported robust growth in motorhomes (+27-29%) and solid demand for towables (+10-12%) in April-June. Dealers also noted strong demand for used RVs (particularly motorhomes), driving used values higher according to dealers. We believe better used RV values (combined with a better housing market and higher stock prices) have helped reduce the negative equity that had prevented consumers from purchasing new RVs.
Dealers short on motorhomes. Dealer inventory appears lean in motorhomes and balanced in towables. On a days inventory basis, motorhome inventory appears flat relative to last year (99 days vs. 101 days), but by a 9:1 ratio dealers indicated that inventory was “too low” versus “too high.” The desire for inventory is also evident in the strong motorhome backlogs Winnebago (+130%) and Thor (+105%) recently reported. A limited supply of Class A chassis has exacerbated the inventory shortage. The number of days of towable inventory also appears flat, but slightly more dealers consider inventory “too low” than “too high” – a sequential improvement. Recall that dealers stocked up ahead of the retail season – a bet that paid off.
Dealer sentiment high. Dealer sentiment remains near record levels, based on our proprietary index, but fell slightly versus April. Some dealers pointed to Internet competition and supply shortages as sources of frustration, but strong retail trends and favorable credit conditions keep confidence high. We note that credit has been a tailwind in recent years but could face a challenge as interest rates rise – a trend to watch.
If you got trapped on the highway behind any pokey motorhomes or recreational vehicles over the holiday weekend, take solace in this: You were being inconvenienced by an American industry on the rebound.
MarketWatch reported that the most recent sales figures from the Recreation Vehicle Industry Association (RVIA) show that RV and motorhome shipments to dealers for the year through May topped 144,000, a 13% increase over the previous year, keeping the industry on track for its best year since the recession started, The mega-camper business all but collapsed during the last recession, thanks to the combination of economic upheaval and high gas prices, with sales falling 58% from 2006 to 2009. Shriveling credit markets played a role, too, with many lenders unwilling to finance RV and motorhome purchases even as they freed up money for car loans in general.
Indeed, some analysts say looser lending policies are a major factor behind the current rebound. A spokesman for Thor Industries Inc., the company that makes Airstream and other popular RV brands, recently told Kyle Stock of Bloomberg BusinessWeek that buyers can now “get financing pretty easily up to about $150,000.”
A quick search online suggests that interest rates on RVs start at around 4.4%, compared with under 3% for the typical auto loan.
RV salespeople say that retiring “snowbird” Boomers are their biggest customers; the trade group doesn’t publish specific age breakdowns, but its literature suggests that ownership rates are highest among those between age 55 and 75.
Speaking of snowbird stereotypes, the archetypal motorhome, in which the driver’s cabin and the living quarters are all on the same chassis — Jack Nicholson’s Winnebago in the movie “About Schmidt,” for example — accounts for only about 12% of RV sales. Travel trailers that get towed behind another vehicle, like the Airstream, make up the majority of the market. Some of those are quite modest, but price tags on the most luxurious models can top $90,000.
The Recreation Vehicle Industry Association (RVIA) assigned exhibit space to 30 RV manufacturers representing 47 brands during the space drawing on June 14 for the 61st Annual California RV Show, which is shaping up to be even better than last year’s event.
According to a press release, Monaco RV/Holiday Rambler drew first (assigned 20,000 square feet) followed by Jayco Inc. (57,000 square feet), Leisure Travel/Triple E RV (4,000 square feet), Sportsmobile West (2,000 square feet), and Pleasure Way Industries (2,000 square feet).
“Many companies increased their exhibit size,” said Tom Gaither, RVIA western show director. “We have already exceeded the size of the event last year with four months to go. We have space requirements for more than 595,000 square feet of space as compared to just over 584,000 in 2012.
Gaither expects to have 1,200 RVs on display at the California RV Show. “We’re going to have great representation among the many product types available in both the motorhome and towable markets,” he said. “In particular, we will also have a very large selection of toy hauler products, probably the largest selection found at any consumer show.”
He added that during the summer and early fall RVIA staff will visit with exhibiting manufacturers and local dealers to talk to them about programs offered at the show to help them increase their sales. “It’s one thing to just exhibit, it’s entirely different when you show up with a plan to achieve your goals and measure your show results,” Gaither said.
The 61st Annual California RV will take place The Fairplex in Pomona from Oct. 11–20. For more information visit www.TheBestRVShow.com or contact Tom Gaither at (818) 248-6600 or firstname.lastname@example.org.
The news from the Recreation Vehicle Industry Association (RVIA) that shipments for May were up nearly 12% over last May came as no surprise to Joe Wooldridge, sales manager at Indiana’s Great Lakes RV Center and Elkhart RV Center.
As reported by the South Bend Tribune, the company sells RVs not just to a local audience but a national one as well via the Internet. His company delivers them as far away as Canada and Alaska.
“There was a tremendous surge of travel trailers in the spring, which is a seasonal type of activity,” Wooldridge said. “May was a very, very good month for us.”
At Great Lakes RV Center and Elkhart RV Center, sales for the year are up over last year and are going very well, Wooldridge said. The same is true for the entire industry. Through the first five months this year, total RV shipments have now reached 144,015 units, up 13% compared with the same period last year.
Considering that each of the last three years has been up compared with the year prior, that’s saying something, especially in northern Indiana, where more than 83% of all RVs nationwide are made. Elkhart County alone employs more than 24,000 people connected with the industry.
What Wooldridge is seeing are a lot more customers who are opting for the lifestyle on more of a full-time basis, rather than just for vacations.
“There’s a lot more people taking extended times,” he said. “They have that ability to do that, of course. But they are spending three months, six months at a time (in their RVs).”
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Susan Dwyer and her husband, David, bought a travel trailer about a year ago and already are looking to upgrade.
According to report in the Indianapolis Star, the couple plunked down $11,000 for their current model, but with five kids still at home, they are looking for something roomier. Even a higher priced RV is less expensive than spending $250 to $300 a night between two hotel rooms for a family vacation, Dwyer said as she waited for her travel trailer to get some minor repairs at Camping World RV in Greenwood.
“We’re pretty financially set right now,” said Susan, a 52-year-old from Bargersville, “and we can travel with the trailer and not feel pinched.”
The Dwyers’ interest reflects an encouraging trend for the RV industry, particularly in Indiana. Sales, though shy of their 2006 peak, are rising as the economy improves.
Nationally, 13.3% more RVs were shipped during the first five months of this year than during the same months in 2012, according to the Recreation Vehicle Industry Association (RVIA). Sales have been rising since 2010. There are a record 9 million RV owners today.
In Indiana, where the unemployment rate stubbornly remains above 8%, the upswing is welcome news. More than 80% of all RVs are made in the Hoosier state, the industry association said.
“Employment is rising as manufacturers are hiring people,” industry association spokesman Kevin Broom said, “especially in Northern Indiana.”
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The boom in the recreational vehicle industry isn’t only helping the many manufacturers and suppliers in and around Indiana’s Elkhart County, it’s helping dealer Tiara RV on Elkhart’s north side.
“May and June are both really strong months. These last couple of weeks are the strongest we’ve seen since the FEMA stuff” in the wake of Hurricane Katrina, said Todd Cornell, the dealership’s owner.
According to a report by The Elkhart Truth, the recession slammed the RV industry, with people putting off discretionary purchases and lenders tightening up their purse strings.
Now that money’s becoming more readily available, Cornell and his staff are seeing more middle class folks getting back into the RV market.
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Crediting factors ranging from good weather to the improving economy, Oregon dealers are reporting increased sales of recreational vehicles.
Brandon Johnson, owner of Johnson RV in Sandy, said sales of motorhomes are up 20% so far in 2013, according to a report in the Portland Business Journal. That follows a 15% uptick in 2012.
“A recovering economy is definitely a factor when you’re selling luxury items,” Johnson said, adding that customers have greater confidence in their personal finances.
About 70% of Johnson’s business is in used motorhomes, which allowed the business to survive after the recession. Now, however, new vehicle sales are outpacing those of used inventory.
Prices for Johnson’s new vehicles range from $50,000 to more than $600,000, with the priciest models leading the way. Used vehicles range from $20,000 to $200,000.
As for towables, sales at Curtis Trailers in Portland and Beaverton are up about 14%, said owner Bob Schriever. His selection includes new and used trailers, fifth-wheels and campers for pick-up trucks. Prices range from $12,000 to $70,000.
“It’s like the floodgates have opened up,” Schriever said, adding that warm and dry weather have boosted sales.
Myrtle Beach, S.C.’s award-winning Ocean Lakes RV Center just completed major renovations, and has expanded its facility. It now includes an additional RV service bay, new RV sales offices, and more space for its camper supplies, parts and accessories store and Awning Center, according to a news release.
The RV Center sits beside Ocean Lakes Family Campground’s main office and is accessible from King’s Highway and from inside the campground.
“This renovation and expansion were crucial to meet the needs and demands of our customers,” explained Chris Allen, general manager of Ocean Lakes RV Center. “We experienced a record year in sales and service during 2012 signaling that the time was right to make this investment in our facility.”
Ocean Lakes RV Center has added a 60-foot by 22-foot camper service bay onto the back of its existing structure. With seven service technicians on the team, the new service bay gives the RV Center the capability of working on larger fifth-wheel campers and park trailers. The company reported that as RVs have grown in size, including height, the older bay made it difficult for technicians to service camper roofs and air-conditioning units. Plus the 1,320 square feet of additional space allow the technicians to work on four units at one time. Ocean Lakes RV Center also travels to other area campgrounds to service RVs at their campsites.
Adding new sales offices became necessary as well. With consumer confidence on the rise and interest rates lower, 2012 was a record year for RV sales at Ocean Lakes RV Center, which specializes in travel trailers and fifth-wheel campers. The RV Center added 425 square feet for two sales offices and a pre-sales lobby to provide more privacy while dealing with financial information. In addition to new campers, Ocean Lakes RV Center also sells used campers and those on consignment. Camper inventory prices range from $7,500 – $90,000 making it appealing for many families and retirees.
The expansion allowed Ocean Lakes RV Center to also increase the square footage of its store, which carries a wide range of camping supplies and accessories. With more floor space, it is now able to stock additional accessory lines. In addition, the Ocean Lakes RV Center increased storage space to accommodate more service and store merchandise for future need.
For more information about Ocean Lakes RV Center, visit www.olrv.com, or call (800) 226-7716 or (843) 238-5532.
Many boomers may have doubts about their nest eggs, but at least one symbol of retirement prosperity is rolling along quite nicely.
According to a MarketWatch report, the Recreation Vehicle Industry Association (RVIA) says that it expects sales of RVs and motorhomes to reach 307,000 units in 2013, which would make this the industry’s best year since 2007.
The RV business all but collapsed during the last recession, thanks to the combination of economic upheaval and high gas prices, with sales falling 58% from 2006 to 2009. Shriveling credit markets played a role, too, with many lenders being unwilling to finance RV and motorhome purchases even as they freed up money for car loans in general. Indeed, some analysts say looser lending policies are a major factor behind the current rebound.
A spokesman for Thor Industries Inc., the company that makes Airstream and other popular RV brands, tells Kyle Stock of Bloomberg BusinessWeek that buyers can now “get financing pretty easily up to about $150,000.”
RV salespeople say that retiring “snowbird” boomers are their biggest customer group; the trade group doesn’t publish specific age breakdowns, but its literature suggests that ownership rates are highest among those between age 55 and 75.
Speaking of snowbird stereotypes, the archetypal motorhome, in which the driver’s cabin and the living quarters are all on the same chassis accounts for only about 12% of RV sales.
“Travel trailers” that get towed behind another vehicle make up the majority of the market. Some of those are quite modest, but price tags on the most luxurious models can top $90,000.