RV Industry Downturn

[DaveP]

The following two paragraphs are from today's WSJ. Look's like the RV industry (and economy?) might be turning down.

Elkhart, Ind., is flashing a warning sign that a recession could be just ahead. Capital of the country’s recreational-vehicle industry, the northern Indiana city and the surrounding area are watched by economists and investors for early indications of waning consumer demand for luxury items, often the first sign of economic anxiety.

Shipments of recreational vehicles to dealers have fallen about 20% so far this year, after a 4.1% drop last year, according to data from the RV Industry Association. Multiyear drops in shipments have preceded the last three recessions.

[Lara Me]

I think the pent up demand after the recession is largely tapped out. The bigger concern is that younger families seem to be signaling that they don’t need the costs of RV ownership.

Plus, the volatility in the market means those with 401ks and stock options are probably rethinking the wisdom of dumping $50k plus into a rapidly declining asset.

A new AS is roughly $10k more expensive MSRP than it was just two years ago. At a certain point, the costs of these things becomes tough to justify vs other vacation options.

[turk123]

Most of us have lived long enough not to be amazed at the sudden turn of markets at the whim of the "experts" and the media covering it. Of course, the media wants a recession because of the upcoming election. If they would just leave well enough alone.

But we can't talk of these things here so shhhhhhhhh!

[waninae39]

this article states that there growth in this industry as more young people are getting in

Why young people are driving an RV revolution. Recreational vehicles are surging in popularity, spurred by interest from younger buyers
https://www.theglobeandmail.com/driv...rv-revolution/

[John&Vicki]

I don’t want to violate any forum rules regarding politics - in fact I can’t think of anything I’d less rather talk about. But it would be interesting to discuss the economy if that’s acceptable.

I’ve been involved with the vintage Porsche community for many years. An extraordinary bubble in the market value of the early cars has just come crashing down. On the other side of the bubble curve, starting 4-5 years ago, prices boomed, with some years and models increasing 300-400%, and more. However, in the last year, prices have come off substantially, 25-40% (except on the exceptionally collectible cars, which are still doing well).

With what I just read above regarding the RV market, plus a number of other signs, it does appear that the economic winds may be shifting a bit. It would be great to gather *facts* to try and understand what is happening as there’s going to be a lot of smoke and mirrors by folks with agendas.

[MAJORJDB]

Imho, I think many people are waiting to pull the trigger on "big ticket" items for a year or two in order to see where the economy is actually headed. RV sales are a good indicator of the health of the economy and it does appear that sales across the board are slipping. The question is, will the future generations have the disposable income to support the RV industry (AS in particular), I'm not so sure. Will they want to invest in something so expensive (new) when their leisure time may be more limited than now and a retirement date more uncertain. AS price increases appear not to be slowing as they are most likely going to try and get as much out of the consumer as they can before the "curtain" falls. I think the Nest model takes away from AS's historic past and should be cancelled. AS management should focus on quality control and a proven design to even possibly justify their expense or the future might be very rocky indeed!!
Jim

[Jim & Susan]

Subscribed. Let me go grab the beer and popcorn.

[vanster]

Like John&Vicky being a huge Porsche fan I was just at Werks ( Monterey Car Week ) and there is a noticeable decline in attendance and auction results. Disposable income maybe coming into question.

[John&Vicki]

The young folks can just hitch up their tiny house (that might be too close to the bone to be funny.)

Few random observations...

- Some longtime bulls on Wall St. are pulling in their horns. There is some real validity to the forecasting prowess of an inverted yield curve. Warren Buffet is sitting on a mountain of cash.

- Several countries are concerned about a recession. Germany is just about in one.

- Consumer spending overall in the U.S. is very strong.

- Companies are hoarding cash awaiting for some of the political uncertainty to clear up.

[smithcreek]

Part of it is generational, following the trends/tastes of the the baby boomers. The vintage and custom stringed music instrument business, which I'm involved in, had a crazy decade or more starting in the early 2000's when baby boomers who played guitar back in college decided to buy the guitar they always wanted but could not afford during their younger years. The past few years the demand seems to be drying up. Younger players are not picking up the slack, they just are not impressed with old or expensive guitars/instruments.

My next door neighbor owned a motorcycle shop that specialized in buying, selling and servicing used (but "like new") Harleys. For almost a decade, two or three time a week he came home with six bikes in his pickup and trailer. Three or four years ago he said the gig was up, business was slowing considerably since most of the boomers that were going to buy Harleys had one and lots were starting to sell. He closed up shop a year ago and walked away.

I imagine over the last ten years of so a huge numbers of boomers decided it was time to get the RV they always talked about and hit the road. Maybe that contributed to a bubble that is starting to deflate.

[bweybright]

This thread reminds me of my undergrad Econ classes: lots of statistics, lots of experts, lots of numbers, lots of trends, lots of opinions. And in the end it is all just a SWAG and the first person to write the paper in 5 years gets the credit for being the genius. Until then we are just the students paying tuition (using our Airstreams) oblivious to it all I hope as we enjoy what we have to use now.
At least that is how I have chosen to deal with it all. Besides I want to fix mine and use it so it really doesn't matter!!! This thing is not a cash investment. It is a personal investment that defies economic policies and reality.
Just my thoughts.

[ZOZ]

Originally Posted by smithcreek

...My next door neighbor owned a motorcycle shop that specialized in buying, selling and servicing used (but "like new") Harleys. For almost a decade, two or three time a week he came home with six bikes in his pickup and trailer. Three or four years ago he said the gig was up, business was slowing considerably since most of the boomers that were going to buy Harleys had one and lots were starting to sell. He closed up shop a year ago and walked away. ...

We sold our two Harleys and a Corvette and bought our AS!


Randy

[rmkrum]

Never wanted a Harley or a Corvette. Son bought the Airstream and passed it to us to maintain and use. He’s a gen X type...

[Daquenzer]

My degree is in economics. And one thing I have learned is that economists are pretty bad prognosticators. In fact I read an article in the WSJ that the pundits are only right about 29% of the time. The reason they get on TV in the first place is because of their contrarian positions. Krugman predicted a collapse of the market after Trump got elected. He has a noble prize in economics. Very bad prognosticator.

As to the demand for RVs. It’s probably a natural cycle that has to do with demographics, politics, economics and a host of reasons. Is it a predictor of a recession? Probably at least for RV manufacturers.

But when I look at RV lots I’m thinking, “How they going to sell all these things?”

I see it from time to time in the real estate market as an appraiser. I call it “irrational exuberance.” Some think that real estate will always go up in value despite the fact they pay an exorbitant price. And RV dealers I believe are much the same. They think the good times will just keep on rolling. So just order more units. But they don’t analyze their market. They just think it will always be good.

All markets go through corrections. Housing, stocks, RVs, corn prices, etc.

Go camping.

[OTRA15]

Originally Posted by Jim & Susan

. . .
Let me go grab the beer and popcorn.

Originally Posted by Daquenzer

. . .
Go camping.

Well said.

AAP -- Avoid Analysis Paralysis!

KISS.

[OTRA15]

FYI THO stock price chart updated on earlier thread:

http://www.airforums.com/forums/f161...ng-187046.html

Peter

[Zybane]

Originally Posted by turk123

Most of us have lived long enough not to be amazed at the sudden turn of markets at the whim of the "experts" and the media covering it. Of course, the media wants a recession because of the upcoming election. If they would just leave well enough alone.

But we can't talk of these things here so shhhhhhhhh!

"Real Time" host Bill Maher doubled down Friday on his desire for the U.S. economy to fall into recession in hopes of blocking a second term for the President, -- telling his panel of guests any hardship that results would be "very worth" it.

[HHPJ]

“We shouldn't measure everything in terms of GDP figures or economics. There is something called quality of life.”
Nigel Farage

[Tomzstream]

Seems to me that the industry is declining for a number of reasons, and yes I can cite policies of the current administration that have impacted it.

Affordability is an issue. Costs of manufacturing are up, starting with the steel and aluminum tariffs, and now all sorts of stuff that goes into RVs that are sourced in China... AC's, Fridges, various electronics, etc. Price increases are substantial.

Secondly, the tax act passed a couple of years ago makes it very difficult to itemize a second home interest deduction due to the fact that the std deduction is now quite high. Many of us have treated our RV's as such and the loan costs can be substantial, and my personal observation is that loans are getting more expensive. Definitely higher now than when I financed my most recent AS purchase a couple of years ago (USAA RV rate).

There could be some demographic trends as well. With unemployment declining for the last 6 years or so, and the high cost of individual medical insurance, many older folks are choosing to stay or return to the workforce to get medical coverage and may be deferring retirement and consequently their RV purchase.

These are just a few things that crossed my mind... BTW, recessions are not created by the media... they occur when the consumers pull back, and so far that isn't happening except perhaps for discretionary items like RVs!

[skyguyscott]

Of course there is a recession coming. There's also a bad storm brewing. But, like forecasting weather, it's all about the timing.

Wally himself often felt consternation about the RV market, "There was never a more mercurial industry!" he said.