In the midst of this year’s shortages and growing inflation, the RV industry has produced more goods and earned more cash than ever, according to a report by Reuters.
Winnebago Industries Inc. announced positive fiscal 2020 revenues in October, an increase of more than half over the year before. On Friday, the company is expected to report its second consecutive quarter with more than $1 billion and a 33 percent rise in earnings per share, according to estimates of analysts that Refinitiv compiled.
Thor Industries Inc. announced record-breaking results for its fiscal first quarter last week. The largest producer also noted that its backlog at the close of October stood at $18 billion, which is 100 percent higher than the same period last year.
Winnebago Chief Executive Michael Happe said that the retailers of his company have “been able to optimize retail pricing in a way they have not been able to do in a long, long time.”
The recreational vehicle industry is a perfect example of how many U.S. producers have been in a position to prosper despite COVID shortages and price hikes in raw materials, ranging from plastic and steel to electronic components and foam. The increase in RV sales started in the early days of the outbreak, as concerned Americans sought alternatives to travel without the dangers of motels or flying in planes.
Industries that are geared towards outdoor activities have exploded during the outbreak. Swimming pool sales, boats, and all-terrain vehicles soared following initial lockdowns.
However, shortage in staffing is also a problem for the industry that has had to struggle to fill positions in manufacturing hubs such as northern Indiana.
Despite these obstacles, the RV industry is making and shipping far more than ever before. Wholesale deliveries of RVs in North America are expected to surpass 602,200 units this year. It is 40 percent more than last year and 19 percent more than the previous record set in 2017, as per the RV Industry Association. The study, conducted by ITR Economics, is projecting an increase of only 2 percent next year, up to 613,700 units.
RV Retailer LLC CEO Jon Ferrando noted that higher-cost raw materials, along with higher labor costs and transport costs to move trailers and motor homes across the nation from factories to stores, have resulted in numerous price increases passed on to consumers instead of the typical one-time adjustments.
“Certainly, this year, there’s 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.
The prices of RVs indeed differ in a wide range. RV Retailer offers everything from teardrop-shaped tow-along campers all the way to $1-million diesel motorhomes.
Meanwhile, LCI Industries CEO Jason Lippert believes that problems with the supply chain will continue. However, he doesn’t see the rising cost of goods and services easing consumers’ demand anytime soon.
“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 factor that could cause challenges to the sector somewhere down the road is the surge of gasoline prices, the report added.
However, James Boyle, a spokesman for the RV Industry Association, said the industry isn’t expecting the current fuel prices to reduce sales anytime soon, pointing out that many RVs are utilized for short-term trips and tailgating, not long road trips.
It’s captivating to see how the RV industry has navigated shortages and inflation. Companies are adopting innovative strategies to source raw materials and control production costs. Moreover, there’s a shift towards offering new RV models to cater to evolving consumer demands. It’s interesting to witness the industry’s adaptability and ability to thrive amidst challenges.