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For years, RV industry executives generally believed it was not the price of fuel that determined RV sales, but the availability of fuel.
But now, Doron Levin, the columnist for Bloomberg.com who follows the auto industry, takes the point of view that, yes, fuel prices have a profound impact on RV sales.
In a piece on Bloomberg.com titled “Recreational Vehicle Sales May Rise With Cheap Gas,” Levin wrote, “Though low interest rates and a rise in disposable income seem to favor the industry, history shows that the price of energy is the key to how it fares. For the past 22 years, relatively cheap fuel allowed sales to prosper.”
The idea that concerns about the availability of fuel have a bigger impact on RV sales than the price was born in the 1970s, when wars and political turmoil in the Middle East led to gas station closures on weekends to conserve scarce supplies, and long lines of motorists at the pump when the stations were open.
But, 30 years later, the Middle East remains in turmoil and, except for panic buying during the evening of last Sept. 11, gas and diesel fuel supplies are ample. In fact, gasoline still can be purchased for less than $1 a gallon in some parts of the country.
If anything, the events of Sept. 11 should have created worries about the availability of fuel during the years that a person would use the RV that they recently purchased. However, “rather than disrupt the (RV industry’s upward) momentum, the Sept. 11 attacks seem to have stimulated interest in RVs, which represent a leisure and vacation alternative for anyone wanting to avoid air travel,” Levin wrote.
Of course, thanks to the law of supply and demand, the price and availability of fuel are related. And motorhome sales did plunge during the spring of 2000 when gas prices climbed dramatically, even though RV enthusiasts do not drive their motorhomes all that many miles when compared with the family car or SUV.
So, it can be concluded that rising gas and diesel fuel prices, even though they have only a marginal impact of the operating cost of a motorhome, created a feeling of uncertainty that had a negative impact on sales.
But this is different than worrying, as was the case during the 1970s, about actually running out of supplies.
Maybe it can be concluded that, fuel prices are one of several indicators of the near term future of the economy. Consequently, during the spring of 2000, when prices at the pump climbed, that signaled that the rapidly growing economy would eventually cool-off? But now that fuel prices are low, that’s a signal that the currently sluggish economy will pick up steam.
As a result, perhaps it can be said that RV sales, particularly motorhome sales, function as a leading economic indicator _ going into decline before the overall economy cools, and heating up before the overall economy begins to show improvement.