RV Industry Forging Ahead Despite Some Headwinds

By: Rick Kessler | September 9, 2019

While declining wholesale shipments have apparently
triggered a firestorm from Wall Street analysts, RV Industry Association (RVIA)
officials are quick to point out that the past couple of years, when filtered
through a historical context, represent some of the industry’s best on record.

The bottom line: The sky is hardly falling. In fact, data
supports the notion that dealers have successfully been selling excess
inventory and the industry is about to see the line graph intersection of
retail demand vs. production rates.

Scott Stropkai, president of Grand Rapids, Mich.-based
Statistical Surveys Inc. (SSI), the RV industry’s leading provider of market
data, offered, “While wholesale shipments are a good barometer, the real health
of the RV industry is determined by retail sales. If consumers are still buying
units at historical high levels, which they are, then wholesale shipments will
follow.

Furthermore, while retail sales are down 9.14% through July
of this year officials said 2019 still presents a robust market as Stropkai
noted, “So far, 2019 is the third best year in recorded history for retail
sales of RVs,” adding that, “2018 was the best year ever, so are comparisons
this year are versus the strongest market in history so we need to put that in
context when looking at this year’s numbers.”

According to SSI’s latest report, retail has outpaced wholesale by 49,943 units YTD through July, indicating inventories are declining. As a comparison, last year through July retail outpaced wholesale by 16,427.

“August and September are typically months where retail
outpaces wholesale while the last quarter of the year are inventory build
months as dealers prepare for the following year,” Stropkai related.

As far as wholesale shipments, the industry is expected to
total 401,200 units in 2019, off 17.1% from 2018, according to independent RV
industry analyst Richard Curtin, director of Surveys of Consumers at the University
of Michigan. However, the rate of decline will ease substantially in 2020 with
RV shipments projected to be down 3.5% at 387,400 units.

This forecast comes after the industry topped 504,000
wholesale shipments in 2017, the culmination of an unprecedented period of
growth following the 165,000 units in 2009 during the Great Recession.

“So are we at 504,600 units right now? No — but that is an
all-time record high. But just because you’re seeing a little bit of a retreat
on that all-time high over the last couple of years, that doesn’t mean we’re on
our way to 160,000,” said RVIA Senior Director of Research Bill Baker.

Baker pointed out that even if 2019 finishes with the
predicted 401,200 wholesale shipments, it’s still the fourth best year on
record. Likewise, the projected 387,000 units in 2020 would represent the sixth
best year on record. And both figures, he added, would dwarf the 30-year
average of 294,700 units, the 20-year average of 331,200 units, and the 10-year
average of 332,200 units.

Baker pointed out that even if 2019 finishes with the
predicted 401,200 wholesale shipments, it’s still the fourth best year on
record. Likewise, the projected 387,000 units in 2020 would represent the sixth
best year on record. And both figures, he added, would dwarf the 30-year
average of 294,700 units, the 20-year average of 331,200 units, and the 10-year
average of 332,200 units.

“So, is the market falling from an all-time high? Yes, it
is. But, put in context, it’s still good a market in any comparable record when
historically looking at wholesale shipments,” Baker told RVBUSINESS.com.

“As you look at the life cycle of the industry over the last
30 years,” he continued, “it’s just one of those periods where you’re going to
see shipments received from a high, find a new level for a few years and then
start heading back up. ‘An expected cyclical reset’ would be a good way to term
it, and that’s sort of the big picture of where the market stands now.”

He added that while there is a bit of turbulence — tariffs
and domestic political uncertainty being two of them — all economic indicators
remain favorable.

“In the grand scheme of things, the overall economy is still
healthy. It’s still expanding. It’s still growing. Consumer spending is really
strong right now and inflation rates is not an issue — and it’s anticipated the
Fed will continue to keep an eye on that to keep the economy on a growth path,”
Baker said.

“And then if you look in the long-term picture,” he
continued, “you’ve got Millennials that have shown they have a great interest
in RV travel and camping. They’re the biggest segment of the workforce now and
they’re just now entering their ‘family-building, RV-buying’ type of years. The
Boomers still have a tremendous impact on the market, and Generation X — which
is a pretty big demographic — are buying RVs, too.

“You have three generations buying RVs now, so from a long-term
perspective — and with all that RVIA and RVDA does to help promote the market
and promote ownership through Go RVing — we still have a very bullish outlook
for the next decade and beyond.”

Source: https://rvbusiness.com/rv-industry-forging-ahead-despite-some-headwinds/

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