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Tourism Holdings will shrink its U.S. fleet by about 17% as the rental RV operator seeks to address an “unacceptable” performance from its North American business.

Scoop Business reported that the New Zealand-based company said the U.S. vehicle sales market is in decline, and it estimates the volume of wholesale transactions is down 40% and retail sales are down 10% What’s more, heavy discounting is squeezing margins, something Tourism Holdings expects to continue to another 12 months.

“Despite the current market conditions, our U.S. performance for FY2019 to date is unacceptable,” chief executive Grant Webster said in a statement.

“However, there is nothing which indicates our fundamental build/buy, rent and sell model is broken or that we have a poor business.”

The company, which entered into a partnership with Thor Industries Inc. to form TH2 in February of 2018, downgraded earnings guidance in April, blaming the deterioration in the U.S. business, and said it was reviewing its operations that include Road Bear, Britz and El Monte RV rentals, which they also sell.

Tourism Holdings affirmed its intention to declare a final dividend of 14 cents per share in the current financial year, keeping the annual payment in line with the 27 cents paid in 2018. It also reaffirmed guidance for profit to be $25-28 million in the year ending June 30. Net debt is expected to be about $240 million due to the decline in the vehicle sales environment.

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