RV sales got off to a strong start during the first quarter, but the full year, most likely, will be only “slightly better” than 2001, according to Ken Landon, executive vice president of the KeyBank Recreational Lending Group, a major source of RV dealer inventory finance.
“We saw a slowdown in May, it actually dipped below a year-ago, but it picked up towards the end of the month,” Landon said. “This June will be on par or slightly above 2001.
“The remainder of 2002 will be slightly above 2001,” Landon continued. “And 2003 will be a year of continued recovery — not a boom — but continued moderate recovery.”
Cleveland-based KeyBank, which also provides loans for retail purchases of RVs, believes its RV-related business will grow 10% in 2003, but that will largely be due to certain companies leaving RV lending last year while some others have cutback their exposure to the RV sector, he said. “There won’t be a whole lot of money coming back (to the RV sector from finance firms).”
Meanwhile, the RV dealer body is “still pretty strong financially, unlike what was the case after the last recession (in the early 1990s),” Landon said. “This time, the dealers saw it (the sales slowdown) coming and they lowered their inventories. Dealers are still being conservative in ordering inventory. Most have been through two recessions now.
“The successful dealers feel having the right inventory at the right time is crucial,” he said. “Maybe not so much the brand as the models and product type.”
The Federal Reserve lowered interest rates on numerous occasions during 2001 and that “helped dealers weather the storm,” Landon said. So far this year, the Fed has left rates unchanged, but KeyBank’s economists believe “there could be a slight uptick in rates later this year, maybe a 1/4% increase in the third or fourth quarter,” he said.