Greg Gerber posted on March 17, 2008 09:58
WEST ALLIS, Wis. -- Some dreams of buying motor homes and travel trailers have been dashed by declining home equity and nervousness about the economy, even as dealerships offer low prices to stimulate sales.
Wholesale shipments are expected to be down 13 percent for towable campers and 17 percent for motorhomes this year, according to the Recreational Vehicle Industry Association. Nationwide, motor home sales are down roughly 40 percent from their peak in 2004.
"We expect the RV industry to worsen in 2008 before improving in 2009," said analyst Craig Kennison with Robert W. Baird & Co. "The declines are severe, but not altogether surprising. Demand continues to suffer as consumer confidence deteriorates and the promise of lower borrowing costs so far fails to materialize."
Motorhome and travel trailer sales are strongest early in an economic growth cycle when interest rates are low and consumer confidence is improving. Sales languish when the economy sputters.
Analysts said recent reductions in interest rates haven't been enough to jump start RV sales, which are important in Wisconsin's economy.
About 5,300 motor homes and travel trailers are sold a year in the state, with 20 percent of those sales made in the metropolitan Milwaukee area. Also, manufacturers such as Actuant Corp. of Glendale make components for the RV industry.
Many consumers are waiting to trade in their recreational vehicle for a new model, hoping the cost of borrowing money edges down a little more. It's not unusual to have a 10-year loan for a travel trailer or motorhome.
Some dealerships have cut prices to stimulate sales of the most expensive motor homes and travel trailers that cost them thousands of dollars in finance charges. Without too much difficulty, buyers should be able to get 20 percent off the manufacturers suggested retail price, said Mike Prosser, owner of Prosser RV and Cruise America Motor Home Rental & Sales in Milwaukee.
Some new motorhomes are helping change the image of gas-guzzling motor coaches. Among them is a 24-foot Winnebago View that gets up to 18 miles per gallon. That compares with about 6 miles per gallon for a typical motor home.
Spurred by retiring baby boomers, and young families buying their first camper trailers, the long-term prospects for the RV industry are good. Dealerships have prepared for a recession and have kept tight controls on inventories. They're anxious to make sales but aren't desperate, Kennison said.
SOURCE: Milwaukee Journal Sentinal