The market for recreational vehicles hit a ditch a few years
ago as the financial crisis and recession reeled in credit and
sent consumers on a mad dash away from big-ticket purchases.
The industry began to grind its way out of that mess in 2010.
Today, manufacturers of RVs and RV components are enjoying their
strongest growth in years thanks to a combination of better
economic conditions, improved lending and new products.
Leading names such asThor Industries (
),Winnebago Industries (
) andDrew Industries (
) have all seen a recent rise in sales and earnings as the RV
industry continues to recover from the beating it took in 2008
The Recreation Vehicle Industry Association, a Reston,
Va.-based trade group, expects overall shipments of RVs --
including travel-trailers, campers and motor homes -- to reach
273,600 units this year.
That's up from 252,300 units in 2011 and well above the
165,700 units that were sold during the industry bottom in
The current rebound is partly due to the natural business
cycle. Once an industry hits bottom, there's no place to go,
theoretically, but up.
But the RV industry also benefits from other positive trends,
says RVIA spokesman Kevin Broom.
"There's a new product mix out there that is helping drive
sales," he said. "On the motor home side, there are an increasing
number of fuel-efficient vehicles. You have better technology,
more and different kinds of products, and different ways of
The industry has gotten another leg up from an expanded
customer base that goes beyond the traditional RV demographic of
retirees and empty nesters.
Today, about one-third of RV owners have kids at home under
the age of 18, Broom says.
Credit markets also have loosened up vs. a few years ago, when
the financial crisis caused many banks to tighten up their
lending standards for expensive items. This was an especially
thorny problem in the RV business, where the average vehicle is
priced around $37,000.
"The credit freeze in late '08 and early '09 hurt the RV
industry two ways," Broom said. "There was an inability on the
part of many consumers to get loans. RV dealers had a hard time
getting financing to replace their inventory."
That issue has improved considerably over the last year or so,
he says. More financing options are available to dealers, which
means more product is available to consumers at the retail
And those consumers are buying. In August, the most recent
month data are available, RV wholesale shipments rose 15.7% from
the prior year to 24,460 units, according to the RVIA. It was the
strongest August total in five years.
Among publicly traded companies, the two largest manufacturers
of trailers, campers and mobile homes are Thor and Winnebago.
Thor is the bigger of the two. It logged $3.1 billion in sales
during fiscal 2012, which ended in July. It makes towable RVs,
with trailer brands including Airstream, Dutchmen, Crossroads and
Heartland. The company distinguished itself by eking out a profit
even during the darkest days of the industry downturn.
"They are the only ones to my knowledge who showed
profitability and a strong balance sheet during the recession,
with net cash and no debt," said Elliott Schlang, founder and
managing director of the Great Lakes Review, a Cleveland-based
firm that researches leading stocks based in the Midwest.
Winnebago had a rougher go of it during the recession. The
company lost money in 2008 and 2009, but has since recovered to
post three straight years of black ink. Its annual sales grew 17%
to $582 million in fiscal 2012, which ended in July.
Winnebago is the nation's leading manufacturer of motor homes,
with its namesake Winnebago brand as well as the Itasca and Era
Company watchers expect to see Winnebago add to its market
share position in coming quarters.
"Given that Winnebago has the strongest brand recognition
within the RV industry (and) a leading market share within the
Class A & C models, it is well-positioned to benefit from
favorable longer-term industry secular trends," Citigroup analyst
Gregory Badishkanian noted in a recent report.
IBD's Building-Mobile/Manufacturing & RV group also
includes Drew, which makes parts and components for the RV
industry;Cavco Industries (
), which makes manufactured and modular homes; andPatrick
), which makes wall and ceiling panels for RVs and manufactured
The group is up 40% so far this year, making it a top 20
industry among the 197 groups tracked by IBD.
The biggest development in the RV market over the past
decade-and-a-half is the shift toward trailers, which are RVs
that hitch to the back of other vehicles.
Trailers now account for about 90% of the total RV market,
experts say. Fifteen years ago trailers made up only half of the
market, with much of the rest coming from motor homes.
"Towable is the fastest-growing and most stable market in the
RV industry," Schlang said.
Thor gets 87% of its RV sales from towable products, he says,
and ranks No. 1 in the U.S. towable market with a 36% share of
total retail sales.
One reason trailers have come to dominate the RV market is
that they are now light enough to be towed by family vehicles
such as minivans and SUVs. In years past, only heavy-duty pickup
trucks could tow them.
"The cost of materials has come down, and you now have
trailers made of lightweight aluminum instead of steel," Broom
said. "Manufacturers are able to fit the same type of living
space into a smaller overall footprint."
Much of the recent technology in RVs has centered on making
the vehicles more fuel efficient. Many motor homes now get 15 to
20 miles per gallon, up from an average of 11 to 12 miles per
gallon a decade ago.
"Motor homes and trailers are getting smaller, lighter, more
aerodynamic, more ecologically friendly," Broom said.
Meanwhile, the living space in RVs has gotten bigger thanks to
smaller and more streamlined appliances.
"The flat-screen TV has been fantastic for the RV industry,"
Broom said. "Before, you had to have several feet of cabinet
space to hold a tube TV. The flat-screen TV can be attached to
the wall, which creates more space.
"You also have combination microwave/convection ovens that
take up less space."
While the RV Industry Association expects RV shipments to rise
8.4% this year, next year's increase is expected to be less than
The economy will play a part in whether those projections are
too high or too low. For now, the prognosis is largely
"Winnebago expects increasing demand from a better RV market,
driven by improvements in consumer confidence and new
single-family housing starts, and plans to further increase their
production pace," Citigroup's Badishkanian noted.