The RV industry, a notable barometer of economic health, is witnessing a resurgence in sales, signaling positive trends for the broader economy. According to an article by CNN, Chill RV Rentals, a Los Angeles-based company, typically sees its fleet of 16 campers fully booked well in advance.
However, this year, reservations have been lighter, and trips shorter, indicating a cautious consumer approach due to limited discretionary spending.
“We’re definitely seeing demand for RV travel slowed down compared to previous years, and I don’t think it has to do with people coming out [the pandemic] and going on different kinds of trips,” said Nika Shneyder, co-founder of Chill RV Rentals.
“I actually think it has a lot to do with people having less discretionary spending available. I think we’re going to pick up this summer, in July and August for sure; but historically speaking, we would have been busier by now,” Shneyder added.
This cautious consumer behavior is mirrored in the retail sales of RVs, with businesses experiencing softer but improving demand and growing optimism within the industry.
“People don’t make these large, luxury purchases unless they’re actually feeling better about the economy,” said Michael Hicks, an economics professor at Ball State University. “It’s so sensitive to interest rate changes, which often precede a downturn.”
The recent uptick in RV shipments, a proxy for sales, after last year’s downturn, is a positive sign amid high inflation and interest rates. This trend suggests that the economy might be stabilizing, though interest rate reductions could further stimulate consumer activity.
“We think [interest rate cuts] will offer a little bit of a trigger to consumers becoming more active again,” said Michael J. Happe, president and chief executive officer of Winnebago Industries, during the company’s March earnings call.
During the pandemic, there was a significant surge in RV sales as people sought alternative travel options.
However, this demand has since leveled off, resulting in a more balanced market. Many pandemic-era RV buyers are now consigning their vehicles, creating opportunities for companies like Chill RV to rent out these units.
“We’ve been able to get a little creative with it,” Shneyder explained. “Instead of purchasing our own inventory, because the rates are so high, we’ve opened up a consignment program where we rent out privately owned RVs and do a profit-share.”
RV shipments reached over 600,000 in 2021, a 40% increase from the previous year. However, by 2023, orders dropped to 313,000. Despite this decline, consumer spending on RVs remains robust, with nearly $38 billion spent in 2023.
The RV Industry Association forecasts shipments to range between 329,900 to 359,100 units for 2024, expecting growth in the following year as interest rates potentially decrease and inflation stabilizes.
“We do know from our surveys that the desire to own an RV and purchase an RV is still there and still is high,” said Monika Geraci, spokesperson for the RVIA. “Inflation, interest rates do just hit people’s pocketbooks and make it a little bit harder to follow through on those desires,” Geraci added.
Elkhart, Indiana, known as the “RV Capital of the World,” reflects the industry’s health. Manufacturing and transportation dominate employment in Elkhart, making it a crucial production hub.
The city’s unemployment rate, which spiked during economic downturns, has stabilized, indicating optimism among RV producers about market recovery.
Michael Hicks noted that many potential buyers had advanced their RV purchases to take advantage of low borrowing rates during the pandemic, impacting sales in 2022 and 2023.
“Employment in this sector is ebbing a bit, which is consistent with slower sales,” Hicks added. “However, we haven’t seen any of the large job cuts we did during the Great Recession. [The unemployment rate in Elkhart] suggests optimism by RV producers that the market will strengthen in the coming months.”
Dealers like International RV Wholesalers remain optimistic, with steady customer interest and bank lending, despite higher interest rates.
“Customers are still driving on the lot looking to buy an RV,” said David Titus, co-owner of International RV Wholesalers in Elkhart. “Some customers are leaning toward something a little more modest because of interest rates, and they’re also planning shorter trips closer to home — versus the 3,000- or 4,000-mile cross-country haul — because of inflation and fuel costs,” Titus added.
The upcoming election year adds a layer of uncertainty, but overall, sales are trending positively compared to pre-pandemic levels.
David Titus observed that election years tend to cause some uncertainty, and this year’s particularly contentious nature adds to it. He mentioned that despite the busy local atmosphere in Elkhart, with bustling restaurants and heavy traffic, business could always be better, but it could also be much worse.
The RV industry’s recovery and growth highlights consumer confidence and spending capabilities. As the industry continues to rebound, it serves as a crucial indicator of economic stability and resilience.
