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The outlook remained “pessimistic” among the 147 RV dealers recently polled by Robert W. Baird & Co. in its third-quarter survey designed to gauge the pulse of the retail sector.
Analyst Craig Kennison summarized: “Conditions remain dreadful with few signs that a recovery is imminent. With few buyers and excess inventory, dealers plan to order significantly fewer units, putting pressure on manufacturer revenue/profit. We expect more capacity (dealers, manufacturers, lenders) to exit, providing a long-term opportunity for the survivors, but things may get worse before they get better.”
Highlights from the survey showed:
• Retail traffic: Motorhome unit sales fell 40% in the third quarter, according to dealers, while towable sales fell 15%. Weak consumer confidence, tighter credit, falling home values and higher oil prices remain stiff economic headwinds. Traffic worsened as the quarter progressed.
• Inventory: Motorhome inventory increased to 173 days from 130 days a year ago (210 in July). Towable inventory remained relatively stable at 125 days from 113 days a year ago (137 in July).
• Orders: Dealers plan to reduce orders further in the face of weak demand. For the next six months, dealers plan to order 59% fewer motorhomes and 26% fewer towables.
• Pricing/Capacity: Dealers report aggressive discounting driven by depressed demand and excess inventory. Baird said that some manufacturers have liquidated finished goods inventory below cost in order to raise cash, disrupting equilibrium in the market. Dealers expect other dealers, manufacturers and lenders to exit the market, suggesting more disruptions.
• Financing: Banks continue to tighten credit standards, further impacting dealer sales. Meanwhile, KeyBank recently pulled out of the market.