RV towable sales slowing?

[goducks10]

Dealer Poll: New Towable Inventories Too High
Print Print
December 29, 2018 by RVBusiness Leave a Comment

Editor’s Note: The following report by Recreation Vehicle Dealers Association (RVDA) Director of Industry Relations Jeff Kurowski, appearing in the December issue of RV Executive Today, breaks down results from a recent Baird dealer sentiment survey.

Dealers surveyed late in October said their new towable RV inventories were too high, while their used towable inventories were balanced, according to Robert W. Baird & Co., the Milwaukee-based investment firm that surveys dealers quarterly in partnership with RVDA.

The Baird firm feels dealers’ belief that their towable inventories were too large was fueled by the desire they have each year to reduce inventories during the fourth quarter. Higher interest rates also were a factor. As one dealer wrote, “There is too much inventory on dealers’ lots. We have to get better inventory turns to make money, as our profits have been interest rates, we can’t afford to stock what we once did.”

Another dealer added, “I’m hoping the industry is just catching its breath after some very strong years. I still expect 2019 to be very good – consumer confidence is high and the local economy strong – all should offset higher costs and interest rates.”

Dealers surveyed in late October said they had a 120-day supply of towables, compared with 114 days in late July and 114 days in October 2017.

Commenting on retail demand for towables during the August through October period, one dealer wrote, “I’m not sure what happened this fall; it started to slow in August and never re-gained momentum.” Another said, “I had a record August- October last year, but this year was about the same as 2016, so it was a bit disappointing.”

Tet another dealer reported his towable unit volume is up 7 percent, but his gross sales revenue is up only 4 percent, due to a shift in the product mix to smaller and lower- priced trailers. Another dealer said, “We continue to see weakness in stick and tin. Margins are stressed. The selling point that works is under $20,000, but the unit needs to be 28 to 30 feet. We are dumping at any cost; the gap between fiberglass walls and stick and tin is closer than in the past. Customers are comparing floor plans more than exteriors or unit class.”

In the motorized sector, dealers estimated their days supply was 119 days as of late October, which was lower than 127 days in late July and 129 days as of October 2017. But one motorhome dealer reported that “higher interest rates are negatively effecting overall business and are the reason for flat sales for new units and a big increase in sales of used.”

Another dealer said that Class As are “questionable in our market today, but Class Cs are still doing well.” Yet another reported, “The price point is changing – we’re selling more gas to diesel and seeing a good turn on diesel Class Bs when we can get them.”

[JAC1982]

irishtom29 wrote:

JAC1982 wrote:
Also forgot to add, the cost of a truck that is able to pull many towables safely has gotten crazy as well.....

Not necessarily. Austere base model trucks are available at reasonable prices. It’s just that so many think they need a fancy soccer dad truck. But fancy trucks don’t tow any better; indeed, because they have less payload than stripper trucks they’re not as good, if anything.

I meant compared to a car. That's often the choice for many people... they can't afford to have a car and a tow vehicle, so their tow vehicle has to function as a daily driver as well. Driving a truck to work every day can get expensive, especially during times when gas prices are higher. It's just another added expense to RVing that younger people maybe can't afford to do.

[irishtom29]

JAC1982 wrote:
Also forgot to add, the cost of a truck that is able to pull many towables safely has gotten crazy as well.....

Not necessarily. Austere base model trucks are available at reasonable prices. It’s just that so many think they need a fancy soccer dad truck. But fancy trucks don’t tow any better; indeed, because they have less payload than stripper trucks they’re not as good, if anything.

[JAC1982]

Also forgot to add, the cost of a truck that is able to pull many towables safely has gotten crazy as well.... and used trucks in good condition are hard to find.

[JAC1982]

My husband and I are in our mid-30s (very early Millennials depending on who you ask). We are a rarity in our friend-group to have our set up. Most of our neighbors with RVs of some kind are 10+ years older than we are. Most of our friends still tent camp, or they have a few little kids (like 2 or 3 under 5) so they don't camp at all right now. My husband makes a much larger income than most of our friends (mine is more average), and do not have any kids, nor do we plan to have any. If we had more of an average to slightly above average income, or had a couple of kids (daycare here is 1200-1500/mo per kid) no way could we afford to have what we have, especially since the COL in Denver Metro is on the high side. People in our age range often still have student loans they're working on, and came into the workforce just before the big recession hit. I know my own income was slashed by 75% between 2008 and 2009, and I still haven't gotten anywhere close to what I was making before then (real estate industry). Add in the fact that many employers have reduced benefits in order to save money or to make up for the rising cost of healthcare, such as vacation time, and retirement benefits. I am fortunate to have 4 weeks of PTO, but my husband only has 2-3 (depending on his workload). Plus, at least around here, you have to plan way in advance to reserve a spot somewhere because everywhere is so crowded (mostly by older people coming to visit) So once you add up all these factors, it's no wonder that younger people aren't buying RVs.

[TheBar]

IMHO the great recession caused RV sales to tank, then as disposable income increased RV sales went up to replace old units and people new to camping who now have money. The market is now saturated so sales had to slow down at some point. There are other factors like kids living at home until they are 30+, lower pay rates and reduced work hours, which also traces back to the recession. Don't forget people under 50 have to save more because Social Security is no longer guaranteed to stay at the current levels. They don't have pensions they have 401Ks which are certainly not guaranteed. After this terrible year on Wall Street the smart ones are putting their money in the bank.

[Grit_dog]

Well, pretty much everyone I know who "camps" with their kids is rockin a TT of some sort. Most are newer and pretty big. We got sucked into RV camping from tent camping because of a move to AK and a little more extreme environment than the National Park campground. Nevertheless, it stuck, and we enjoy the camper.
If sales are slowing, it's becasue of market saturation, IMO.
IDK the actual numbers, but having just taken a road trip down to Vegas and back, there are more freakin Rv dealers than I could imagine. Same with driving east from here. Same in the Midwest....etc etc.
Guessing that many existing dealers have exploded with the last economic boom and plenty of new dealers as well. Bound to be some leveling of the industry.
It's not like everyone needs a rv like they need an I phone.

[colliehauler]

Beentherefixedthat wrote:

DutchmenSport wrote:
Baby Boomer generation dying off pretty fast now. Those that still remain have already made their purchases and currently living their final dream. Sales will continue to decline. The only other group passionate about buying RV's was the minimalist, Tiny House, live off the grid folks, who have now become disillusioned with the whole concept. It wasn't what they thought it would be. The "fad" is now over. Sales declining. Another era is ending. Something will follow, just wait. It always does.

The Baby Boom generation spans 1946 thru 1964 by most measures. Being born in 1953 I am near the beginning.

But those born in 1964 are only 54... TEN YEARS away from formal retirement.

Therefore the idea that the Baby Boomers are dying off is just misleading. There are still millions out there to get into their 2nd 3rd or 4th RV of their lives.

The "Tiny House" or lifestyle reduction movement is stil strong and growing. It is driven by generational factors and most of those folks are not living off the grid.

In fact the RV industry press continues to write articles as do the mainstream press about those who are "downsizing" from the large behemoth Class A's to smaller class B's and C's and TT's.

I agree with the industry folks on this that the Main reason for the lagging sales is that the industry overbuilt larger units that are now slower moving because the hot sellers are now smaller units.

In other words the manufacturers didn't respond to the market soon enough.

The last RV show I went to almost exclusively had small entry level campers, very few motorhomes and 5th wheels.

[colliehauler]

It's a cyclical industry just like automotive and aircraft.

[FF286]

About a month ago a local news channel reported that a local company, I believe it was suburban , making furnaces for rv’s was laying off workers do to rv sales slowing.
As to families not taking kids camping if you go to any campground when school is out, if you can get a spot, you can tell that is not the case. I would have to guess that the price of new rv’s and hearing reports of poor build quality is the main problem.

[et2]

We would fall under the baby boomers. We just purchased our biggest and most expensivev RV ( 45' tag axle motorhome) since we started camping. It most likely is our last, but things could change depending how things play out.

As far as the younger generations, I see more of they're buying what they can afford at the time. Travel trailers and fivers are by far the biggest sales for RV's. I don't see it as they're looking to downsize in any way. Most are for recreational purpose, not to live in.

[Beentherefixedt]

DutchmenSport wrote:
Baby Boomer generation dying off pretty fast now. Those that still remain have already made their purchases and currently living their final dream. Sales will continue to decline. The only other group passionate about buying RV's was the minimalist, Tiny House, live off the grid folks, who have now become disillusioned with the whole concept. It wasn't what they thought it would be. The "fad" is now over. Sales declining. Another era is ending. Something will follow, just wait. It always does.

The Baby Boom generation spans 1946 thru 1964 by most measures. Being born in 1953 I am near the beginning.

But those born in 1964 are only 54... TEN YEARS away from formal retirement.

Therefore the idea that the Baby Boomers are dying off is just misleading. There are still millions out there to get into their 2nd 3rd or 4th RV of their lives.

The "Tiny House" or lifestyle reduction movement is stil strong and growing. It is driven by generational factors and most of those folks are not living off the grid.

In fact the RV industry press continues to write articles as do the mainstream press about those who are "downsizing" from the large behemoth Class A's to smaller class B's and C's and TT's.

I agree with the industry folks on this that the Main reason for the lagging sales is that the industry overbuilt larger units that are now slower moving because the hot sellers are now smaller units.

In other words the manufacturers didn't respond to the market soon enough.

[doxiemom11]

Another thing that may be happening, is those that started out with a towable are now getting motorhomes. We know 2 couples, both in accidents with a towable (not their faults) and they have both replaced them with a motorhome. One had a trailer, the other a fifth wheel.

[colliehauler]

If inventories are to high it would be a good time to get a deal on a new unit if a person was interested.

[toedtoes]

Most people do many things when camping - hiking, water sports, off roading, fishing, and so on. And they have been doing those things for generations. So I don't think that changes the attraction of camping for the younger generations.