The recreational vehicle industry has done what many U.S. businesses did in the face of this year’s epic shortages and surging inflation: Churned out more products and made more money than ever before.
Winnebago Industries Inc reported record fiscal 2020 revenues in October—up over 50 percent from the previous year. On Friday it is expected to post its second straight quarter of sales over $1 billion and a 33 percent increase in earnings per share, according to analysts’ estimates compiled by Refinitiv.
Thor Industries Inc, the largest producer, last week reported record results for its fiscal first-quarter while noting its backlog as of the end of October was over $18 billion—a 100 percent increase over a year ago.
Michael Happe, chief executive of the Forest City, Iowa-based Winnebago, said in an interview that his company’s retailers have “been able to optimize retail pricing in a way they have not been able to do in a long, long time.”
The RV industry is a prime example of how many U.S. producers have been able to thrive despite COVID-related shortages—and the related price increases in raw materials from steel and plastic to electronics and foam. The surge in RV sales began early in the pandemic as worried Americans looked for ways to travel without the risks of staying in hotels or riding in airplanes.
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All types of outdoor-oriented industries have boomed during the pandemic. Sales of swimming pools, boats, and all-terrain vehicles all surged after initial lockdowns.
Labor shortages also are bedeviling the industry which has struggled to fill jobs in production hubs like northern Indiana where Thor is based.
Despite all these barriers, the industry is producing and shipping more than ever. Results for the RV Industry Association’s (RVIA) October 2021 survey of manufacturers determined that total RV shipments ended the month with 57,971 units, an increase of 22.5 percent compared to the 47,326 units shipped during October 2020; this October was also the best on comparable record with shipments surpassing the October 2017 total of 48,926 units by over 18 percent. This month’s total was also the highest production total on comparable record for any month, surpassing last month’s record of 55,014 units by more than 5 percent.
Wholesale shipments of RVs in North America are expected to hit a record 602,200 units this year—a 40 percent increase over 2020 and 19 percent higher than the last record high set in 2017, according to an analysis prepared for RVIA. The analysis, by ITR Economics, is projecting a smaller increase of 2 percent in 2022, to 613,700 units.
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Jon Ferrando, CEO of RV Retailer LLC—a Fort Lauderdale, Florida-based retailer with 90 stores in 26 states as of the end of this year—said pricier raw materials, together with higher labor and transportation costs to move motorhomes and trailers across the country from factories to his stores—has meant multiple price increases passed along to consumers rather than the normal once-a-year adjustments.
“Certainly, this year, there are more frequent price adjustments,” he said. But he added that the increases have not curbed the appetite of buyers.
“To the extent we have pressure to raise prices, consumers have great ability to trade down and get the price point they want,” he said.
To be sure, the price tags on RVs range widely. RV Retailer sells everything from $10,000 teardrop-shaped tow-along campers to $1 million diesel motor coaches.
Jason Lippert, chief executive of LCI Industries, the largest parts supplier to the RV industry, said he expects supply chain problems to continue. But he does not see rising prices softening consumer demand any time soon.
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“If you’re a first-time buyer, you’re not looking at what you could have bought in 2018 or 2017,” he said. “People buying their second or third RV will likely think about the price a little more.”
One aspect of rising prices could ultimately add headwinds for the industry: gas prices which have soared this year.
But James Boyle, a spokesman for the RVIA, said the industry does not expect current prices at the pump to curb business anytime soon, noting that many RVs are used for short trips and tailgating, rather than long road trips.
The new shipment report comes on the tail of a recently released survey showing more Americans plan on RVing in the next year than ever before. The survey showed 72 million Americans planning an RV trip in the next year in an RV they own, rent, or borrow—an 18 percent increase over the 61 million reported in the same survey a year ago.
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Worth Pondering…
I’m not afraid of storms, for I’m learning how to sail my ship.
—Louisa May Alcott, Little Women (1968)
