What #vanlife says about a possible recession

Industry has reduced inventory, but is still at the mercy of macroeconomic factors

TRD New York /
Dec.December 14, 2019 01:00 PM
Recreational vehicles (Credit: iStock)

Recreational vehicles (Credit: iStock)

Despite the many articles touting millennials embracing glamping and #vanlife, the recreational vehicle industry has struggled with declining sales and a glut of product over the last two years.

It’s particular concerning because some believe the RV market is a predictor of an economic downturn.

“The RV industry is better at calling recessions than economists are,” Michael Hicks, an economist at Ball State University, told the Wall Street Journal in August.

But manufacturers say the worst is over, and claim they’ve been careful to cull inventory from the peak of over 500,000 in 2017 to about 400,000 this year. Firms such as Thor Industries, which makes AirStream, has cut back production, while other firms have consolidated facilities as sales declined and share prices of the biggest brands fell between 65 percent and 85 percent over the last two years, according to the Wall Street Journal.

The average price of a new RV fell 2 percent in the third quarter from the same time in 2017, even though the average used SUV rose 11 percent. The industry sees real growth potential if it can get over the hump. No longer do RVs appeal to just largely white retirees; the share of younger and more diverse clientele is up significantly.

Observers should be watching the region of Elkhart, Indiana, where about 65 percent of RVs in the U.S. are made. Unemployment in Elkhart was 3 percent in June, below the national rate of 3.6 percent, but up from April 2018. Worse yet, weekly hours worked fell by half a percent in June. [WSJ]James Kleimann


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