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Buyers Responding to Residential Trend in RVs

June 10, 2013 by · Leave a Comment 

Recreational vehicles have evolved to offer more luxuries of home — from second bedrooms with bunks to full-scale, outdoor kitchens built into the side of the trailer.

The Press of Atlantic City reported that as the RV industry continues its rebound from its recession drop, residential amenities are becoming major drivers in the market, according to New Jersey dealers. Outdoor kitchens can include two-burner stoves, refrigerators, television sets, hot-and-cold running-water sinks and grills — all concealed until an outside compartment is flipped open.

“The latest big thing for the towable is an outside kitchen,” said Rick Whitney, the sales manager at White Horse RV Center, with locations in Galloway and Williamstown. “It wasn’t available three years ago at the most. Now they have full outside kitchens and entertainment centers.”

More of today’s RVs include features and options unconsidered decades ago — porcelain toilets instead of plastic, sleek frameless windows, solid wood cabinets and second bedrooms, lending them a more residential feel.

“Kids aren’t sleeping on the couch anymore,” Whitney said.

RVs with such amenities are becoming a large segment of the market — a shift from previous generations that started with entry-level units and gradually upgraded over the years, said John Worthington, marketing director for Driftwood RV Center in Dennis and Egg Harbor townships.

“It’s coming to be the biggest section. There are a lot of younger families getting into RVs. And it used to be you’d start, get a pop-up, then a bigger trailer. Now more families want the four bunks, the outdoor kitchen, they want everything in it,” he said. “It’s growing and it’s now pretty much the majority.”

To read the entire article click here.

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Thor Reports 6% Rise in Third-Quarter Earnings

June 7, 2013 by · Leave a Comment 

Thor Industries Inc. today (June 6) reported a 6% increase in earnings for its fiscal third quarter, ended April 30, on a 13% increase in sales.

Revenue for the third quarter totaled $1.05 billion compared to $926.5 million in the third quarter last year, based on strength in RV sales. Net income for the third quarter was $43.8 million, or 82 cents per diluted share, up 6% from $41.3 million, or 78 cents per diluted share, in the prior-year third quarter.

Sales for the nine months totaled $2.67 billion, up 22% from $2.2 billion in the prior-year period. Net income for the nine months was $94.6 million, or $1.78 per share, up 22% compared to $77.4 million, or $1.43 per share, in the first nine months of fiscal 2012.

“We are pleased with the continued growth in revenues and earnings we were able to achieve in the third quarter, as a number of the actions we’ve taken to improve our operations began to gain traction,” said Bob Martin, Thor president and COO. “While our markets remain competitive, we are now in the middle of the peak selling season for the RV industry, when demand improves and discounting tends to stabilize, leaving us in a strong position to finish out the year.”

Highlights of Thor’s third quarter include:

•  Total RV sales were $929.8 million, up 15% from $807.2 million in the third quarter last year.

• Towable RV sales were $742.5 million, up 9% from $680.5 million in the prior-year period.

• Motorized RV sales were $187.3 million, up 48% from $126.7 million in the prior-year third quarter.

• Bus segment sales were $119.4 million, up slightly from $119.3 million in the third quarter last year.

“Thor generated strong gains in both revenues and net income during the third quarter, based on continuing strength in our RV business and stability in our bus business,” said Peter B. Orthwein, Thor chairman and CEO. “Our results for the third quarter reflect the dealer optimism and improved retail consumer demand that has been building since the beginning of the year, which is now entering peak seasonal demand for our RV products. Based on the current positive momentum we see in our markets, we are confident in our ability to generate growth in sales and earnings for the remainder of the year.”

To view the entire report click here.

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Accelerating RV Sales ‘Good Sign’ for Economy

June 6, 2013 by · Leave a Comment 

The recent acceleration in car sales is impressive, but there’s an even better sign the U.S. economy is getting back on track: surging sales of recreational vehicles. Bloomberg Business Week reported that makers of RVs shipped 32,054 machines in the U.S. in April, a 19% increase from a year earlier, according to data compiled by the Recreational Vehicle Industry Association (RVIA).

RVs are a notable niche because it takes no small amount of consumer confidence to buy a gas-guzzling home on wheels. Between 2007 and 2009, more than half of the RV market disappeared. Light-vehicle sales, by contrast, dropped by 36%. “No one needs an RV,” said Jeff Tryka, a spokesman for Thor Industries Inc., one of the biggest U.S. RV makers. “It’s a purely discretionary purchase, while there’s always going to be a base-level demand for cars.”

The motorhome and towable RV business, a $14 billion market in the U.S., is on track for its best performance since 2007. For the year to date, shipments are up 13% and RVIA expects more than 307,000 vehicles to roll by January. The sales boost doesn’t matter much to Detroit, but it’s big news about 200 miles away in Indiana, where roughly half of the country’s RVs are made. It’s also great for companies like privately held Jayco Inc., the Forest River Inc. unit of Warren Buffett’s Berkshire Hathaway, and Thor, which cranks out some of the most popular RV brands.

When the RV market bottomed out in 2009, Thor’s payroll dropped to 5,400 workers; today it employs 8,800. And in anticipation of higher demand, it just bought a factory in Wakarusa, Ind., equipped with 35 booths for painting giant campers. The company will give a progress report when it announces earnings later today. Last quarter, Thor posted income of $19.9 million—a 45% increase from a year earlier.

To read the entire article click here.

 

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RV Lifestyle Attracting a Broader Demographic

June 5, 2013 by · Leave a Comment 

Ron Spike purchased a Rockwood Windjammer travel trailer at Ruff’s RV Center in Euclid, Ohio, two months ago.

According to a report by the Cleveland Plain Dealer, in the months since he joined the 8.9 million U.S. households — or 8.5% of all American households that now own RVs — Spike is part of a growing community of people who see upscale camping or traveling as a great way to relax.

“I parked mine at a campground in Geneva. Even though it’s about 40 minutes from our home in Lyndhurst, it’s still like going on vacation,” said the 62-year-old recently retired truck driver whose wife Marlene will join the retirement ranks this month. “There’s no stress out there. It’s so relaxing.”

Across town, Ron Revelt of Olmsted Township stopped by Moore’s RV in North Ridgeville to pick up a part for his decked-out fifth-wheel, his third and last purchase made in 2008. But he couldn’t help but check out an even more luxurious recreational vehicle during his visit.

“They keep coming up with more new neat things,” said Revelt, 73, a retired teacher and pilot who talked of new safety features and luxuries in the kitchen and bedrooms. “There’s always something I want.”

Nationwide, sales are rebounding because of new destination campers like Spike and repeat customers like Revelt who travel the country. They represent renewed hope for an industry that has suffered blows since the recession but is now attracting more younger people and families.

To read the entire article click here.

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Demographics, Economy Drive RV Sales Surge

June 3, 2013 by · Leave a Comment 

The first quarter was kind to the recreational vehicle industry. Building on three years of continuous growth, the RV industry experienced an 11.2 percent gain in units shipped in the quarter compared to the first quarter in 2012. And that growth is expected to accelerate.

As reported by the Goshen News, the industry’s forecast issued earlier this year by Richard Curtin of the University of Michigan predicted a 7.5% gain in units shipped for 2013. That gain would mean 307,300 RVs would be sent by manufacturers to dealers. Such a gain would be a significant jump over the low year of 2009, when 165,700 units were shipped during the height of the recession. But a much larger gain would be needed to reach the record year of 2006 when 390,500 RVs went out the doors of local RV factories.

“Every year has been an up year since 2009 if you graph it out,” said Doug Gaeddert, Forrest River’s general manager and chairman of the Recreation Vehicle Industry Association (RVIA), which compiled the quarterly totals.

“One thing,” Gaeddert said of the reason for the continual gain, “is the economy is in much better shape than the media would lead you to believe.”

He said the bank industry has solved its credit crunch, which resulted in RV dealers being unable to finance inventory during the recession and consumers who wanted to buy RVs having to have the best of credit and lots of collateral.

Another factor in the resurgence of the industry is that more people in North America are reaching the ages where they want to travel and camp in RVs.

“The demographics are in the right place,” Gaeddert said. “So the sun and the moon and the stars are lined up real well.”

To read the entire article click here.

 

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Recovery, Boomers Sending RV Sales Soaring

May 31, 2013 by · Leave a Comment 

This spring, Jenny Miller and her husband bought a trailer to take their one-year-old son camping, but the plan had been in the works long before that.

“We had been talking about buying one for a couple of years, and we were just kind of waiting for our finances to get in order so we could make the purchase,” says the 29-year-old Davenport, Iowa resident.

As reported by U.S. News & World Report, Miller is representative of a broader national trend boosting the RV industry. Recreational vehicle sales crashed during the recession as Americans lost jobs and savings, but now, buyers are back and ready to make the RV purchases they put off for so long.

RV shipments dropped by over 30% in 2008 and again in 2009, according to figures from the Recreational Vehicle Industry Association. Annual shipments fell from nearly 400,000 per year in 2005 and 2006 to below 166,000 in 2009, forcing many dealerships and plants to lay off workers and some to close. But the RV industry soon rebounded, posting 46% growth in 2010. Since then, the increase has leveled off but remained strong, with manufacturers shipping nearly 290,000 units last year.

It’s not just that Americans are feeling more comfortable shelling out $15,000 for a camping trailer or $100,000 for a motorhome, says one industry expert. Banks are also now more willing to help customers buy campers and motorhomes.

“This industry was impacted by the economic crisis, as far as the drying up of consumer credit,” says Phil Ingrassia, president of the Recreation Vehicle Dealers Association (RVDA). “As things have improved, the economy has gotten better and there’s more credit available for consumer purchases like an RV.”

To read the entire article click here.

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RV Shipments Bump Translates to Strong Sales

May 29, 2013 by · Leave a Comment 

Two Elkhart, Ind., RV dealerships believe they are headed for a record year in sales. And, according to a report by the South Bend Tribune, based on the latest national numbers, that’s probably not a surprise.

Based on the April figures released Tuesday by the Recreation Vehicle Industry Association (RVIA), wholesale shipments of all RVs were up 10.8 % over March and were 19% better than April 2012.

Last year was the third straight year of increased RV shipments, and April marked the 16th consecutive month of increased shipments compared with the same month a year prior.

And since dealers don’t order RVs unless they believe they can sell them, shipment numbers are generally representative of sales numbers in the industry.

“The banks have loosened up,” said Dave Titus, owner/manager of  International RV of Elkhart. “It’s still not like it was in the early 2000s, but it’s where it should be. The customer has to have some skin in the game as far as down payment. But if the credit is right and the income is right, the bank will give them a loan.”

Scot Moody, a salesman for Total Value RV of Indiana, in Elkhart, said pent-up demand and loosening of credit are two factors behind soaring sales. “It’s a record year here,” said Moody, who has been at TotalValue RV for six years. And it was a record the year before, too, he added.

To read the entire article click here.

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Uptick in Consumer Confidence Helps RV Sales

May 29, 2013 by · Leave a Comment 

The number of recreational vehicles delivered to dealers’ lots is expected to reach a six-year high in 2013 as fledgling RV buyers such as Karen and Jim Smith, of San Jose, Calif., shake off the economic slumber of the past few years and prepare to hit the road this summer.

“There are just so many things to see that we’ve never seen before: Mount Rushmore, the Grand Canyon, Lookout Mountain in Tennessee,” Karen Smith said after writing a $21,000 check for her 18-foot 2014 White Water Retro Travel Trailer that came stocked with a queen-size bed, separate refrigerator and freezer, two-burner stove, microwave, full-size bath, shower and beds for three more people.

As reported by the San Jose Mercury News, the Smiths represent new hope for a U.S. RV industry that sustained a series of body blows beginning with the 2008 recession but now appears to be rebounding in the Bay Area and beyond.

The industry has not seen more than 300,000 RVs shipped to dealers around the country since 2007, the year before the recession took hold. But deliveries this year were up 11% in the first quarter and the RV industry now expects to see a total of 307,300 deliveries of motor homes and tow-able RVs. Towables make up the overwhelming majority of RV sales in the U.S.

The number of both registered motor homes and towable RVs had been steadily falling in California from a 2005 peak of 11,494 motorhomes and 34,032 towable RVs and may have bottomed out in 2009 with 2,633 registered motorhomes and 8,820 towables.

Last year, the number jumped to 3,785 registered motorhomes and 11,565 towable RVs, according to Statistical Surveys Inc., which tracks RV registrations across the country.

“Our industry is an economic indicator,” said Kevin Broom, spokesman for the Virginia-based Recreation Vehicle Industry Association (RVIA). “When shipments go down, they usually go down ahead of a recession. When shipments come back, they usually come back ahead of the recovery. Consumers in general are a little more confident they’ll have their job this year, next year and even five years from now. So they’re ready to make a purchase.”

To read the entire article click here.

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Uptick in RV Sales is Good Sign for Economy

May 20, 2013 by · Leave a Comment 

If you find yourself on the road this Memorial Day weekend, you might want to keep track of the recreational vehicles you see.

MSN Money reported that while not exactly a surefire economic bellwether, RV sales have been coming back after a disastrous recession for the industry, and they may be another indicator of a strengthening economy.

Elkhart, Ind., is the heart of the business, with about 83% of all North American RVs manufactured in the region. Unemployment in Elkhart soared to more than 20% in 2009 as the economic downturn deepened, RV sales plunged and several manufacturers closed their doors or disappeared through consolidation.

“When the stock market went to hell in a hand basket, when the ability to get credit went to hell in a hand basket, when your home (value) all of a sudden . . . went down so drastically, your wealth factor is pretty low. That stops motor home buying,” Richard Coon, the president of the Recreation Vehicle Industry Association (RVIA), said recently at an industry breakfast.

But according to the RVIA, a stronger economy has pulled the industry out of a ditch. The trade group predicts more than 307,000 recreational vehicles will be manufactured and shipped this year. That number is still below the pre-recession high of 353,400 reached in 2007, but it’s nearly twice as high as the low point of just under 166,000 in 2009.

Recreational vehicles come in a wide variety of types and price ranges. Units that fit on the back of a pickup and popup camping trailers start at about $3,500. They go all the way up to tour-bus-size “home away from home” Class A vehicles, which can run anywhere from $50,000 to the hundreds of thousands of dollars. And of course you need to factor in gas prices.

Richard Curtin, the director of the Consumer Research Center at the University of Michigan, says a combination of factors is behind the recent growth in recreational vehicle sales, including an easing of credit terms and better availability of consumer loans, as well as modest gains in household income.

To read the entire article click here.

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Baird Dealer Survey: Q1 Demand Encouraging

April 10, 2013 by · Leave a Comment 

Editor’s Note: Robert W. Baird & Co. recently partnered with the Recreation Vehicle Dealers Association (RVDA) to contact 110 RV dealers regarding demand during the first quarter. The following is a summary of the results.

Early-season trends were strong, despite a later start to spring and slower traffic in cold-weather markets. Retail demand improved nicely, up 9% to 10% in both motorhomes and towables. Dealers consider motorhome inventory lean and towable inventory balanced. With dealer confidence soaring, higher absolute inventory levels are fine.

“We remain bullish on fundamentals and would look for a market correction to provide an opportunity to become more aggressive,” Baird concluded.

Solid retail despite later start to spring. Demand for motorhomes and towables improved roughly 9% to 10% in Q1, despite slower traffic in some cold-weather markets. (Raw survey results indicated 18% growth in motorhomes and 26% growth in towables, but we believe a number of multi-location dealers skewed preliminary data). Big picture, we continue to believe that negative equity among RV consumers has begun to evaporate, driving cyclical recovery. The passage of time (the market peaked in 2004) and better used RV values – along with better home prices and a strong stock market – all play a role.

Inventory appears lean-to-balanced. Dealers appear comfortable with inventory levels. Motorhome inventory appears lean as several dealers mentioned unfulfilled orders (consistent with production constraints manufacturers have reported). Towable inventory appears balanced. Recall that towable manufacturers offered large discounts to protect share on dealer lots, a bet that could pay off if retail remains solid. Based on the number of days of inventory reported, motorhome (113 days vs. 102 days) and towable (115 days vs. 106 days) are up.

Dealer sentiment still lofty. Sentiment remains near record highs as dealers anticipate a recovery. One dealer noted, “if sales continue to follow early trending, this could be one of our best years ever.” After a difficult recession, dealers that survived are enjoying better retail, fresh inventory and easier credit. Indeed, just 5% of dealers reported tighter retail credit trends – and no dealer reported tougher access to wholesale credit. Net, the surge in dealer sentiment helps explain the desire to accumulate inventory – a natural re-stocking effect.

Bullish on fundamentals. We remain bullish on RV fundamentals as a solid cyclical recovery unfolds. We believe that negative equity is evaporating, fueling spending in previously dormant markets (RVs, boats, motorcycles). Meanwhile, dealer inventory is lean-to-balanced, supporting a potential restocking effect and better earnings power. Investor momentum has begun to fade, which could provide an opportunity to be more aggressive.

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