U.S. motorhome manufacturers have seen demand for their vehicles evaporate as a result of the current economic downturn and related credit crunch. No one is quite sure what the market for their products will look like once consumers start spending again, according to an analysis for Reuters by James B. Kelleher.

So why is Wall Street so upbeat about the sector?

RV manufacturers expect to ship just 14,100 motorhomes this year — the industry’s worst showing in the 38 years data has been collected. That is down 50% from the 28,300 motorhomes the industry shipped last year and down 80% from the 71,800 vehicles it shipped in 2004.

To put that in perspective, the U.S. auto industry — the poster child for a business in distress — expects total vehicle sales in 2009 to be down 30% from last year and down less than 50% from their peak at the start of this decade.

Yet while automaker shares remain radioactive, analysts remain remarkably sanguine about Winnebago Industries Inc. (WGO.N) and Thor Industries Inc. (THO.N), the two biggest players in the RV business.

They argue that the market for motorhomes will come back and that the two companies will enjoy much bigger market share — and all the advantages that come with it.

Investors seem to agree. After collapsing along with the broader market after the fall of Lehman Brothers last September, shares of both companies have staged big rallies over the past two months, more than doubling in value and handily outperforming the S&P 500.

But to justify the rosy outlook, investors and analysts seem to be fast-forwarding to some presumed rebound in demand that will take place once the current downturn passes, rather than focusing on the industry’s immediate challenges.

“Dealers report a troublesome environment, with light traffic, weak demand, tight credit and uncertain supply — but few things last forever,” said Craig Kennison, an analyst at Robert W. Baird.

“Consumer confidence has bounced and retail comps are easy — suggesting the potential for a mild recovery.”

How ugly is the current environment? Half a dozen leading motorhome manufacturers and suppliers, including Fleetwood Enterprises Inc (FLTWQ.OB) and Monaco Coach Corp (MCOAQ.PK), have been forced into bankruptcy over the past year.

The handful of companies still standing face a bleak future, in which they are likely to rack up losses for quarters to come because of low capacity utilization in their factories and aggressive discounting in showrooms.

“I think you’re going to see huge discounts,” Bob Olson, Winnebago president and CEO, warned during the company’s last earnings call.

“If you’re in the motorhome buying market right now, you’re probably going to see some deals that you’ll never see again.”

These factors “make it impossible for Winnebago to be profitable” in the short term, said Morningstar analyst David Whiston. Yet Whiston, too, is optimistic.

“The short-term story for Winnebago is bleak,” he said. “Long term, Winnebago’s prospects look excellent. The company’s lack of debt will allow it to outlast almost all competitors. And once dealers begin ordering units again, orders will flow to those manufacturers that appear the most likely to stay in business.”

But a lot can go wrong between now and then. On the company’s last earnings conference call in March,  Olson suggested Winnebago, which has long eschewed the trailer market, was no longer categorically opposed to entering it.

“As far as the travel trailers are concerned,” Olson said, “I think for the last eight or nine months I’ve basically taken ‘no’ out of my vocabulary. So to say that we would never get into travel trailers, I guess I’m not going to say that anymore.”

But there is a good reason that Winnebago has avoided that market. Margins are thin, forcing builders to operate numerous factories around the country to cut down on transportation costs between plant and dealer.

Winnebago’s production facilities are all located in northern Iowa, a central location in the higher-margin motorhome market but a remote one for the localized towables market. Creating the manufacturing footprint to play in that market would be an easy way to mess up Winnebago’s debt-free balance sheet.

Still, Winnebago is desperate to increase production. The company is currently operating at 15% of capacity and delivered just 315 motorhomes last quarter — well below the 1,200 to 1,400 units it needs to break even each quarter.

As a result, the company reported a gross margin of minus 37.1% last quarter — a figure Whiston called “astounding, really jaw-dropping.”

Gregory Badishkanian at Citi Investment Research & Analysis says those margins will continue to be under pressure as long as there is “accelerated price discounting” by dealers trying clear out Monaco and Fleetwood vehicles. But like all analysts, he sees Thor and Winnebago gaining share.

It is not at all clear, however, how big that market will be. The old RV market was driven by consumers who took advantage of low interest rates, easy credit, and rising home values to leverage themselves to the hilt. Those days are gone — perhaps forever.

Analysts seem to have accepted that manufacturers will sell fewer of the big, bus-like RVs that were so popular earlier in this decade and many more of the lower-priced, lower-margin smaller RVs.

If that occurs, Whiston said, “industry profits will be much lower than in the past.”