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News for August 8, 2022

RV Industry Bubble Ready to Burst?

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In 2021, the North American RV industry produced 600,000 trailers and campers, an all-time record. It was partially fueled by the pandemic leaving people wanting open spaces amid few vacation options.

However, as COVID restrictions pass, gas prices soar, and borrowing costs higher than ever, long-haul RV trips may suddenly be lower on the priority list, according to a report.

“This year, they’re quite scaled back and mainly because of the cost,” said Gail Aller-tead, who has been RVing for seven years. “We’re thinking twice about taking trips. It’s not stopping us, but we’re definitely thinking twice about what we’re going to do.”

She and her husband have traveled all over Canada to every province except Newfoundland, Labrador, and all over the U.S., driving as much as 50,000 kilometers in the last seven years.

“It’s absolutely fabulous,” she said.

When they started figuring out this summer’s travel plan, they realized the costs weren’t the same as what they had been in recent years and decided to cut back.

“When we started doing the numbers, figuring out how much it would cost, we realized we’d better stay closer to home this year, save up and do our bigger trip next year.”

The increasing expense of buying, fueling, and then all of the miscellaneous costs has many dedicated RVers like Aller-Stead wondering whether those who bought in when pandemic demand was high will regret their decisions.

“People paid high for that, for getting into the area, and now what they’re realizing with increased demand for parts and access to RV sites, people can’t do that. So what I think we’re going to see — especially with the new people and the newcomers coming into it in the last couple of years — I think they’re going to want to bail out.”

The cost of filling Aller-Stead’s 40-foot diesel bus doubled last year, so the matrix now involves potentially driving and paying for a hotel room, which could cost less in certain situations.

40 years of long-term growth

The RV industry has seen 40 years of long-term growth, which the pandemic has supercharged, according to Monika Geraci, spokesperson for the RV Industry Association, representing the $140-billion RV industry in North America.

In 2021, more than 600,000 RVs were produced in North America, a 20% increase from the 506,000 RVs produced in 2017.

According to Geraci, the sales have been “pretty thin” over the past 18 months. However, there is a record-setting production, and more RVs will be heading toward local dealers, according to a report.

Jeff Redmond, co-owner of Bucars RV Centre in Calgary, said he hadn’t seen a drop in sales just yet.

In the wake of steady growth in sales over the past few years, he said he could have more vehicles sold this season if supply chains can meet the demand.

One of the strongest areas of growth has been in the smaller types of vehicles as people become more fuel-conscious and manufacturers try to build with lighter, more economical materials that are easier to tow.

“Certainly, van life has really taken over. I think with the freedom and flexibility. You can really do anything. It could be a transporter around town, and you can park in a parking lot,” Redmond said.

As the world shifts to more varying types of travel, RBC economist Claire Fan said, Canadians are traveling more and may consider options outside of RVing.

“A lot of these RVs are quite expensive,” said RBC economist Claire Fan.

“And most people would require some sort of financing to support these purchases. And as borrowing costs start to rise, with interest rates increasing, it is getting more difficult to finance these purchases at the get-go.”

Fan said Canadians continue to spend heavily on long-haul trips on planes that weren’t accessible during the pandemic. What was once considered “discretionary spending” on travel has become essential to many consumers, Fan said.

“Everyone’s dying to hop on the airplane to travel somewhere,” she said.

“But how long does that last is really the key question I think we’re trying to answer here. How long before consumers really feel the pinch of rising inflation.”

The question for many watching the RV industry is whether that might affect the prices of RVs in the long run, maybe even create a drop in demand.

For Aller-Stead, she said they are staying closer to home this year, deciding to put off the more than $3,000 it would cost to drive from Ontario to Western Canada until next year.

This article originally appeared on CBC.

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Hi, you might find this article from Modern Campground interesting: RV Industry Bubble Ready to Burst?! This is the link: https://moderncampground.com/canada/rv-industry-bubble-ready-to-burst/