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New inventory levels for dealers continued to rise through the first two months of 2005 as retailers from all sectors reported average increases ranging from 15% to 22% compared with 2004, according to consulting firm Spader Business Management.
Inventory began accumulating at the retail level late last year – particularly in the motorhome sector – when the market softened and some builders overproduced. As a result, many manufacturers have adjusted run rates and implemented discounting programs to keep product moving through the pipeline.
That strategy may, in part, account for significant gains in new RV sales by all three dealer categories at the end of February, including:
* Larger dealers, defined as those with annual income over $10 million, showed average new-unit sales of $1.66 million, a 14.6% increase over $1.44 million for the first two months in 2004.
* Midsize dealers with annual income between $5 million and $10 million increased new unit sales by 19.6% to an average of $555,995 compared to $464,802 last year.
* Smaller dealers, those with less than $5 million in annual earnings, raised new-unit sales by 24% to an average of $239,978 versus $193,510 in 2004.
While overall sales also increased across the board, the large dealer sector was the only category showing a net profit at the end of February. The group raised average net profits 22.5% to $24,104 compared to $19,684 last year.
Other performance highlights:
* Larger dealers increased net sales 13.5% for the first two months to an average of $2.57 million compared to $2.27 million last year. New product inventories averaged $4.84 million versus nearly $4 million in 2004.
* Midsize dealers showed an average net loss of $29,621 through February versus a net loss of $33,900 in 2004 while net sales rose 18.9% to $861,312 compared to $724,271 last year. New product inventories were up 16.2% to an average of $2.16 million from $1.86 million in 2004.
* Smaller dealers incurred an average net loss of $32,725 for the first two months compared to a net loss of $45,877 last year. Net sales increased 26.2% to an average of $371,353 from $294,346 in 2004 and new inventory levels increased 14.9% to $1.13 million compared to $982,990.