Across the RV industry these days, the question on everyone's mind is has the RV boom ended?
The recent economic downturn is claiming lots of victims and the RV industry is no exception The industry is still very strong and no one is panicking – yet – but the indications are that sales, production, RV travel, and consumer demand are all starting to slide.
That's the main topic of this week's Episode 403 of the RV Podcast, along with the RV News of the week, RV questions, tips, and audience feedback.
You can watch the video version of the podcast in the player below on our YouTube RV Lifestyle Channel.
If you prefer an audio-only version, you can get it on your favorite podcast app or click the player below to head it on the device you are reading right now.
The RV Industry has been stressed for the past two years
Like every other segment of society, inflation and shortages have been issues that the RV Industry has been mightily struggling with for the past two years.
Add to that plant shutdowns, backlogged orders, a severe worker shortage and you have a severe crisis – a crisis the industry fought hard and, just as the calendar turned 2022, was largely overcoming.
Finally, inventory levels were increasing, and dealers had new RVs to show consumers, who in some cases have had to wait as long as two years to take delivery of a new RV… often at a considerably higher price than when they ordered it.
It was most definitely a seller’s market.
But then… then came talk about the word that nobody wanted to say, a word that, when last it hit in 2008, all but crippled the industry and gave it its darkest days in history. That word is recession.
The RV Industry has bad memories of the last recession
If we are not now in one, the nation’s economy is perilously close.
The first concrete warning signs started as the first quarter was ending. Record high fuel prices started being set weekly. In just a few months really, fuel costs doubled. Today, gas is routinely $5 a gallon, or more. Diesel is a bit over $6.
Those outrageous pump prices were enough to cool a booming market. But the double whammy came last month with the Fed’s major increase in interest rates.
Rising interest rates mean much less attractive financing and many buyers were priced out even before that.
So what COVID couldn’t do, what the supply chain mess couldn’t do, what all the other issues failed to do, those ever rising fuel costs and interest rate hikes have done: They have curbed the unprecedented public demand for RVs. Not a lot. Not yet. But steadily, bit by bit, the industry is seeing the writing on the wall.
The RV Boom of record demand and record sales is not what it is.
RV Makers are playing it safe through “Production Adjustments”
In recent weeks, some RV manufacturers have announced “production adjustments.” That means they are slowing down the assembly lines. One major RV maker I know of has gone to a four day work week to cut costs and be poised for whatever is coming next. Others, I’m sure, are doing similar “adjustments.”
To a certain degree, this happens seasonally every summer. But against the backdrop of bad economic news on every single front, this downturn is viewed much more ominously.
There are other signs.
The climate is rapidly worsening
The stock market is hitting the bottom line of RV manufacturers hard. Shares for RV makers are down an average of more than 30%, even despite record sales up as much as 85% compared to three years ago in those pre-COVID days.
RV Business News did a story about the bumpy ride being faced by the RV industry last week in which it noted 70% of RV dealers said demand had slowed noticeably since April.
A study by the financial company Truist found a quarter of dealers reported they were already too heavy on inventory – a first in more than four years and not a good sign of a continuing RV boom.
According to J.D. Power, the average retail value across all RV classes in the U.S. has been dropping.
And as if more confirmation is needed, Black Book, which appraises retail vehicle sales, released the Black Book RV Market Commentary for July 2023.
RV prices are going down
Prices, which had been going up for most of the past two years, have reversed course. The average selling price for RV motorhomes was $68,948 which is down $4,402 (6%) from the previous month. Towables are also down, with an average price of $20,196, down 3.2%.
So, the RV Industry’s Boom sure seems to be coming to an end, if it hasn’t already.
For consumers, though, this may not be the same bad news it is on the board rooms of the big RV companies.
Consumers always fare better when a seller’s market ends and it becomes a buyer’s market.
We’ve already noted there is more inventory. That’s good. While high retail prices are still here… and high prices for used RVs are still with us, too… the trend is for continued falling prices.
I can see the day soon when RVs will sell closer to their MSRP, maybe even with a discount as it used to be, instead of way over MSRP as has been the case for two years now.
Used RV prices will likely decline as inflation and high fuel prices causes many RVers to give up the lifestyle. Right now, used RVs are often being sold for more than they cost new.
Will “Production Adjustments” result in better quality?
Improved quality is a likely result of “adjusted production schedules” – sometimes a code phrase for layoffs – because those workers who are building RVs will generally have more experience because of seniority hiring and firing policies at the RV factories. I hate to see anyone lose their jobs. But it’s no secret that the frenetic pace of RV production during the height of the boom is believed by many to be a big reason for the corresponding complaints of poor quality.
I don’t think the RV industry will collapse or fare as poorly as it did back in 2008.
The industry is resilient and creative
The challenges the industry faced post-COVID and the way it met demand despite the very stacked deck it was dealt demonstrated its resiliency and creativity.
But I do think it will cool down considerably in the months ahead. But because even with lessening demand the industry is much stronger than it was even before COVID.
Americans love the RV Lifestyle. That will not change.
The incredible boom of the past two years was unsustainable.
It’s time for the industry to level off a bit, for RV consumers to regain some of their clout and for quality, inventory, and prices to all improve.
What are your thoughts on all of this? Has the RV boom ended?
Let us know in the comments. and if you've missed any of our podcasts, just go here and find them all.
Finally! Mike and Jennifer's Michigan Bundle
(Michigan's Lower Peninsula AND Michigan's Upper Peninsula)
This Michigan Bundle contains our ever-popular Guide to the Upper Peninsula PLUS our newest Guide on the LOWER Peninsula! Here's a little on both ebooks (not a printed book):
Michigan's Upper Peninsula Adventure Guide: This ebook is a seven stop guided exploration of the Michigan UP. We provide a suggested route and itinerary, links to multiple campgrounds and boondocking spots, and the best spots to see along the way. Don’t plan your trip to the Upper Peninsula without it!
Michigan's Lower Peninsula Adventure Guide: This guide explores the Lower Peninsula, also known as ‘the Mitten.” You can easily spot its mitten shape on the map. Most of this guide follows the coast of Lake Huron and Lake Michigan, with a little bit of Lake Erie down near Detroit.