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Robert W. Baird & Co., a Milwaukee, Wis.-based investment firm that regularly tracks the recreational vehicle industry, recently released findings from a survey of 96 dealers designed to gauge dealer sentiment, retail trends, inventory levels and promotional activity in the third quarter.
Results of the company’s “October RV Dealer Survey” showed:
• Exiting the prime selling season, dealers reported a slight momentum decline in the once-hot towable market, offset by a hint of a bottom in the motorhome market.
• The Dealer Sentiment Index deteriorated to 46 from 49 (0-100 scale) based on current conditions as discretionary spending slows, but the 3- to 5-year outlook brightened to 76 from 71.
• Retail demand fell again in the third quarter. Towable volume fell 8% according to dealers while motorhomes fell 15% as discretionary spending slows.
• Promotional activity is up slightly since July as manufacturers looked to combat softer retail conditions.
• Dealer inventory fell as dealers curbed orders to reduce floorplan financing costs. Towable inventory fell 4% versus last year while motorhome inventory fell 17%, according to data provided by dealers. Dealers seem content to reduce lot inventory given the soft retail market and rising cost to finance showroom models.
• Falling gas prices contributed to a more optimistic outlook, as 48% view the next 12 months favorably, up from 30% in Baird’s July survey. Meanwhile, despite cautious order patterns, dealers are surprisingly optimistic about 2007, expecting double-digit growth.
• In summary, conditions remain soft as dealers conclude the peak selling season. Incrementally, dealers report signs of a towable top and a motorhome bottom.