Rebounding RV Sales May Bode Well for U.S. Economy

Strong motor-home industry has historically been good news for economic health.

NOVI, Mich., Feb. 15, 2010— -- Recreational-vehicle dealers had cause to smile at this weekend's annual Detroit Camper and RV Show. The four-day event was packed morning to night, every day.

And the families who came to see everything from small pop-up camp vehicles to 40-foot luxury coaches with bathrooms, refrigerators and built-in barbecues were in a buying mood.

"Things have been great," Chad Neff, general manager of American RV in Grand Rapids, Mich., said. "The traffic has been good and people are buying."

American RV sells a full range of recreational vehicles from small economic campers that get 23 mpg on a diesel engine to the super powered fifth-wheel Montana, which has an interior floor plan that seems almost as large as a studio apartment. Neff, like many other RV dealers at the show, attributed increased industry sales to the improvement in the availability of credit.

"I think there's a lot of pent-up demand," he said. "People right now, they're willing to get out, and the banks are lending more money, and those things are helping us out."

The increased interest is a dramatic change from last year's show, which occurred amid the backdrop of a weakened U.S. economy and uncertainty about the future. RV enthusiasts weren't buying because of job insecurity and the prospects of losing their homes, leaving little appetite for mobile ones. Several RV manufacturers filed for bankruptcy early last year and even industry giant Winnebago had a rough go at it.

The RV industry has long been thought of as a good indicator of the overall economy's performance because RV's are a major discretionary purchase that often require financing. After a sales slump, which coincided with the worsening economy, and an overall lack of enthusiasm at RV shows last year, 2010 has started with a boom for the industry.

Attendance at this year's Novi, Mich., show was up about 15 percent from last year, according to show director Bill Sheffer, who is with the Michigan Association of Recreation Vehicles and Campgrounds.

Attendance Up at Several RV Shows

"We're encouraged by what we see," Sheffer said this weekend. "I'm not an economist but I sure hope this is a harbinger of good things to come."

Attendance was also strong at two other important RV shows last month. The annual Colorado RV Adventure Travel Show was up 26 percent from last year and the Florida RV Super Show surpassed 50,000 for the first time in the history of the show, according to organizers.

The Florida show is one of the most important indicators of retail demand for the industry, analysts and insiders say.

"A year ago this time, financing was terrible," said John Monterusso, a Michigan motor homes dealer. "People's existing RVs took a beating in value so a lot of people were upside down in what they already owned. But things are on the upswing. Sales are better."

About 1 in 12 U.S. vehicle-owning households, or about 8.2 million, also owns an RV, according to the Recreation Vehicle Industry Association. The industry employs more than a quarter-million Americans.

RV lovers and the culture associated with owning the vehicles runs deep across the country. Retirees love the time outdoors, on the road in their vehicles. And people with small children enjoy the family time.

"You're outdoors, instead of being at a theme park or something...," said John Dotson, who visited the show with his wife looking for an entry-level RV in the range of $10,000 to $15,000, "Instead of relying on something else to entertain you,"

He said he has never owned an RV but thinks now is the right time to buy one.

Another Michigan resident at the show, Larry Nethot, said he was looking for a replacement RV. He and his wife are former backpackers and they need a new RV because she no longer likes the outdoors. "Our parents stole our retirement home, so we've got to find another place to sleep," he said.

Nethot checked out an RV that had an LCD television, DVD player, a kitchen dinette and other home furnishing in it. "I like the outdoors but my wife can no longer stand it at the camp, " he said.

The RV is a compromise for the couple.

Interest in High-End RVs Lifts Spirits

Jeff Rank, the president of Prime Time Manufacturing in Wakarusa, Ind., attended the Novi show and was delighted with interest from prospective customers like Dotson.

"The traffic is awesome," he said. "Let's face it, the last couple of years, it's been a struggle. People seem to be in a better mood."

Rank sells the impressive high-end LaCroose RV, which is 35 feet long and features a 26-inch LCD screen inside. That people are looking to buy some of the high-end RVs is a real sign the industry is back on track, he said. "You're already seeing the comeback in wholesale shipments to dealers," he said. "It's about a 50 to 60 to 70 percent increase in shipments."

Rank's family has been in the RV business since 1969 and he says the past few years have been one of the worst periods he has seen in the industry. "It seems like every decade we have had a 10-, 12-year run that has been whatever the U.S. economy is doing, our industry is doing."