baird_new_logo The latest RV Dealer Survey conducted by the investment firm of Robert W. Baird Ltd. in the first quarter of  2009 carries mixed messages about the immediate future  of the RV industry.

 “Dealers report a troublesome environment, with light traffic, weak demand, tight credit and uncertain supply –  but few things last forever,” the summary of the survey begins. “Consumer confidence has bounced and retail  comps are easy – suggesting the potential for a mild recovery. Dealers continue to reduce inventory – but the trend is unsustainable. Fundamentals do not warrant enthusiasm, but it may pay to be early.”

Readers who read past the introduction found these additional comments: 

  • Traffic/Retail. Traffic fell again, but improved in keeping with seasonal patterns. Dealers sold 41% fewer motorhomes and 20% fewer towables.
  • Inventory mixed. Although the absolute level of motorhome inventory has dropped, retail remains soft leaving dealers with 206 days of motorhome inventory, up from 180 days last year but flat with Q4 (204 days). Towable inventory improved to 97 days from 119 last year (154 days in Q4).
  • Orders down – but destocking trend is unsustainable. Dealers plan to order 33% fewer motorhome and 20% fewer towables in the next six months – but the rate of decline has slowed. Anecdotal evidence suggests many dealers are buying just one unit for every two sold – an unsustainable replenishment rate that eventually must reverse.
  • Credit remains a problem – especially wholesale finance. The retail credit environment remains bad, but wholesale credit is worse. Until wholesale credit stabilizes, we expect the destocking trend to continue.
  • Fate of bankrupt manufacturers uncertain. Investors see an opportunity for RV survivors like Thor and Winnebago to gain share – but the fate of Monaco, Fleetwood, and other bankrupt manufacturers remains unclear. Navistar acquired Monaco assets and could resume production – but there are serious warranty issues that could hinder a return. Meanwhile, we estimate that dealers are sitting on 4-5K motorhomes from bankrupt manufacturers and consumers making low-ball offers.

“Things are bad,” the summary concluded, “but we think positive retail comps are on the horizon as consumer confidence improves. At some point, the inventory cycle will reverse, in our view, creating an opportunity to invest. Fundamentals do not warrant enthusiasm – but it might pay to be early.”