A strong economic outlook, fueled by “relatively low inflation, interest rates and energy prices,” continues to create a healthy environment for RV sales that will carry into 2017, according to economist Richard Curtin.
Curtin, director of consumer surveys at the University of Michigan and a consultant for the Recreation Vehicle Industry Association (RVIA), projected that shipments will reach 404,800 in 2017, well above the quarter-century record of 390,362 set in 2006. Moreover, it would mark the eighth consecutive year of expansion.
“The favorable outlook is based on continued modest gains in jobs, incomes, and household wealth and relatively low levels of inflation, unemployment and interest rates,” Curtin stated. “To be sure, it is likely that inflation and interest rates will move higher, although the size of the increase will still leave them reasonably low.”
Curtin also foresees 2016 closing out strong, with shipments expected to show a 5.9% year-over-year increase with 396,400 units shipped. Travel trailers are on track to capture 65% of all shipments in 2016 and 2017 while Curtin predicts motorhomes will represent 13% of all shipments with 50,900 units this year followed by 52,500 in 2017.
“Strong growth in personal disposable incomes will boost sales, especially among younger buyers,” Curtin noted, adding, “Slower growth in top-end models reflect sluggish gains in home values and stock prices as well as uncertainty about future economic policies.”
First-quarter results set the tone for 2016, according to Curtin, as shipments rose to 108,195, an increase of 11.5% from the previous year. “It was the highest quarterly total in 10 years, and the third best quarter since 1980,” Curtin said.
That increase was paced by conventional travel trailers, which rose 14.6% year-over-year and accounted for 65% of all first-quarter shipments. Motorhomes also performed well during the three-month period with Class A’s posting an 11.2% gain from 2015 while Class C’s were up 24.7%. Curtin noted that each segment “reached a decade peak.”
Curtin also addressed the growth of the Millennial generation and the potential impact on the RV industry.
“The Millennials and Boomers demonstrate more similarities than differences in their pursuit of the RV lifestyle,” he said. “Each generation shares core values and preferences for outdoor family recreation. Each is about equal in number and each has faced significant economic challenges in recent years.”
He said that a key for the industry was continuing to bring new products into the pipeline that would reflect the millennials’ tastes.
“Many buyers now prefer smarter and smaller RV designs – units that provide digital and high-tech advantages that are still within their constrained budgets,” he said.”RV manufacturers have continued to demonstrate their unmatched ability to produce innovative products meeting these changing preferences for RV designs and features.
“While today’s surge is primarily due to Boomers, tomorrow’s strength will be based on Millennials and Generation Xers,” he added.
Article excerpted from RVBusiness.com
