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RV Rebound

Sales showing improvement after slumping during recession

December 12, 2010
By MIKE ZUMMO, The Leader-Herald

As the economy crumbled over the last several years, American consumers tightened their belts and curbed spending on certain luxuries, and that drove the market for recreational vehicles to its worst level since 1991. This year, however, things are starting to pick up again.

"This year, 2010, the first quarter was kind of sluggish," said Andy Heck, general manager of Alpin Haus, the largest RV dealer in Fulton and Montgomery counties. "Once it got going, the whole rest of the year has been better than last year, and probably a little better than expected."

Heck said sales started to pick up in March, and through November, sales increased every month over 2009.

Article Photos

Recreational vehicles are shown for sale in the lot at Alpin Haus in Amsterdam on Wednesday.

The Leader-Herald/Bill Trojan

Nationwide, the drop in sales caused plants to close, which resulted in the loss of thousands of jobs.

Heck said during the recession, customers tended to become more thrifty and that might mean they would buy a towable RV for $15,000 instead of a $20,000 one. Because of that, he said, the pre-owned market has been strong.

"They're asking themselves, 'what's the best value I can get for what I want to do,'" Heck said.

Bob Olson, CEO of RV manufacturer Winnebago Industries Inc., says a trend of families buying cheaper towables is encouraging. "They have to start somewhere. And one thing about this lifestyle, you get hooked on it and you want to upgrade," he said.

Winnebago recently signaled its intention to move back into the towables by signing a letter of intent to buy SunnyBrook RV, which makes those type of RVs. Winnebago last built travel trailers in 1983.

Before the recession hit, towables accounted for eight out of every 10 new RV shipments. Now they make up about nine out of 10 RVs shipped to dealers.

This year, RV makers are starting to turn profits and have begun to hire. And dealers are ordering more RVs for their showrooms. This year, shipments of RVs ranging from entry-level pop-ups to spacious motor homes are expected to hit their highest level since 2007, when the economic downturn began.

Typical RV buyers are people between 35 and 54 with disposable income. and they're starting to buy again, say industry leaders and dealers who convened at a trade show in Louisville last week. But a growing share of RV sales come from families choosing less expensive towable RVs, including folding camping trailers, or pop-ups. Those towables are smaller and cost a fraction of the price of amenity-filled motor homes favored by older travelers.

The upswing is a sign that somewhat looser credit, stable fuel prices and improved consumer confidence are inspiring Americans to buy more RVs.

Heck said in the past two years, Alpin Haus cut back on its inventory and focused less on motorized RVs and more on selling more towable trailers. Now, with the companies producing more RVs and the credit market loosening a bit, he said the company will stock heavier in anticipation of better sales.

"People have sat idle and have some money on the side," Heck said.

The industry is looking for a recovery across all RV models.

It expects shipments from manufacturers to dealers to hit 236,700 in 2010, up 43 percent from last year's nearly 20-year low of 165,700. Through October, shipments have risen nearly 53 percent from the same period in 2009, according to RVIA. In 2011, shipments are forecast to reach 246,000.

Higher shipments mean dealers expect retail sales to rise. While the two don't always correlate, there are signs that sales will, in fact, grow in the mid-single digits in 2011 "with a bias toward cheaper units," says Bret Jordan, who follows RV companies for Avondale Partners.

"It correlates pretty well with consumer confidence and economic improvement," he says.

Still, this year's pace of shipments remains far below the 2006 level of 390,560 - the high-water mark for a quarter-century.

And speed bumps remain. Many consumers remain wary of big-ticket purchases and many RV owners have delayed trading in older models for bigger ones. Credit isn't as nearly free flowing as in pre-recessionary times.

Still, a recovery seems to be taking hold.

Mike Zummo can be reached at Information from The Associated Press was included in this report.



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