Poor economy is the nail in RV industry's tire

updated 6:24 p.m. ET Dec. 4, 2008

LOUISVILLE, Ky. - Under the gloom of plunging motor home sales and with travel trailers stacking up on lots, recreational vehicle makers and dealers at their national trade show this week tried to lift their spirits by joining in song.

“You gotta have heart,” they sang at the kickoff breakfast, trying to stay resilient in an industry that’s hit a big speed bump. The swooning economy and a credit crisis that makes it tougher to finance a six-figure purchase are keeping potential RV buyers off the road.

“These are ugly times,” said Richard Coon, president of the Virginia-based Recreation Vehicle Industry Association. “I’ve seen lots of downtrodden faces, and for good reason.”

RV companies showcased their newest models at the industry event Tuesday through Thursday, including hybrids and slimmed-down motor homes touted as more energy friendly. Now the trick is to lure skittish customers to dealers’ lots.

Sideswiped by the U.S. economic downturn, robust RV sales earlier in the decade have given way to lean times for the industry.

Through October, shipments from RV companies to dealers for the year fell 27 percent from the comparable period in 2007, according to RVIA. The downturn is expected to stretch into 2009, when shipments are forecast at 186,800 units, about 25 percent lower than this year’s projected total of 248,000, according to the association, citing statistics from Richard Curtin, director of consumer surveys at the University of Michigan.

“This industry is in the middle of a three-year downturn, and you can really probably even date it farther back than that,” said Kathryn Thompson, who follows RV companies for Avondale Partners.

At the height of the industry’s upturn this decade, shipments totaled 390,500 units in 2006. But those are now fond memories for manufacturers and dealers feeling the economic pinch.

Larry Troutt, an RV dealer in the Houston suburb of Waller, said his sales are down about 20 percent from last year. Customers are still checking out his stock and he’s still making deals, but a larger percentage of his inventory has been stuck on his lot.

“Right now, my sales manager has my approval to sell anything that’s close to a year old for what we paid for it,” said Troutt, who has a couple hundred units on his lot.

Tom Stewart, a retired oil company employee who heads an RV owners club outside Seattle, said he’s noticed the effect of the tough economy. The club’s members are taking shorter trips to save on gas, he said. And he’s looked for ways to save money on the RV trips he takes with his wife.

“We’re doing a lot more inexpensive overnighters, looking at the free RV parking,” he said. “If we’re en route to a stop, rather than pull in to an RV park with full hookups and pay $25, $30 a night, we have lots of casinos out here that welcome RVs, and we’ll use those.”

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