A rigid lending environment will further contract RV shipments this year as economist Richard Curtin, director of Consumer Surveys at the University of Michigan, revised downward his estimates to reflect a 30% decline from 2007.
“There has been a significant decline in the supply as well as the demand for credit,” Curtin said in the Winter 2008 issue of Roadsigns. “Most lenders that have continued to provide RV loans have raised credit standards, increased the amount of the required down-payment and have widened the spread between their cost of funds and the rates they charge on RV loans.”
Curtin projected deliveries to total 248,000 units in 2008, down sharply from 353,400 last year and a deeper decline than his previous estimate of 266,800 units.
Curtin also scaled back on expected 2009 wholesale deliveries, projecting a 25% drop to 186,600 units. Previously, he had forecast shipments of 254,700 units.
“The declines are expected to be broadly shared across all types of RVs,” he said. “Importantly, RV shipments are expected to improve around mid 2009, although at a very slow pace. Most of the increase will be in shipments of conventional travel trailers and fifth-wheels, with motorhomes posting only small gains.”
Curtin noted that the disparity would result in towables accounting for a record 80% of the units sold in 2009.
In addition to financing, he sees a variety of factors continuing to pressure the industry, including a decline in home and stock values, mounting job losses and a “collapse in consumer confidence.” Curtin, however, pointed to the tighter lending environment as the key contributor to lower performance.
“Indeed, credit conditions have tightened to such a degree that many willing buyers now face great difficulties in obtaining financing,” he said. “Moreover, the demand for RV loans will recover sooner and to a greater degree than will the supply of credit to the RV market. Manufacturers best able to arrange financing will have a distinct advantage in securing a greater share of sales.”