RV industry rolls through U.S. shortages, inflation

LCI Industries

14/12/2021 16:42

By Timothy Aeppel
    Dec 14 (Reuters) - The recreational vehicle industry has
done what many U.S. businesses did in the face of this year's
epic shortages and surging inflation: Churned out more products
and made more money than ever before.
    Winnebago Industries Inc  WGO.N  reported record fiscal 2020
revenues in October - up over 50% from the previous year. On
Friday it is expected to post its second straight quarter of
sales over $1 billion and a 33% increase in earnings per share,
according to analysts' estimates compiled by Refinitiv.
    Thor Industries Inc  THO.N , the largest producer, last week
reported record results for its fiscal first quarter while
noting its backlog as of the end of October was over $18 billion
- a 100% increase over a year ago.
    Michael Happe, chief executive of the Forest City,
Iowa-based Winnebago, said in an interview that his company's
retailers have "been able to optimize retail pricing in a way
they have not been able to do in a long, long time."
    The RV industry is a prime example of how many U.S.
producers have been able to thrive despite COVID-related
shortages - and the related price increases in raw materials,
from steel and plastic to electronics and foam. The surge in RV
sales began early in the pandemic, as worried Americans looked
for ways to travel without the risks of staying in motels or
riding in airplanes.
    All types of outdoor-oriented industries have boomed during
the pandemic. Sales of swimming pools, boats and all-terrain
vehicles all surged after initial lockdowns. 
    Labor shortages also are bedeviling the industry, which has
struggled to fill jobs in production hubs like northern Indiana,
where Thor is based.
    Despite all these barriers, the industry is producing and
shipping more than ever. Wholesale shipments of RVs in North
America are expected to hit a record 602,200 units this year - a
40% increase over 2020 and 19% higher than the last record high
set in 2017, according to an analysis prepared for the RV
Industry Association. The analysis, by ITR Economics, is
projecting a smaller increase of 2% in 2022, to 613,700 units.
    Jon Ferrando, CEO of RV Retailer LLC - a Fort Lauderdale,
Florida-based retailer with 90 stores in 26 states as of the end
of this year - said pricier raw materials, together with higher
labor and transportation costs to move motor homes and trailers
across the country from factories to his stores - has meant
multiple price increases passed along to consumers, rather than
the normal once-a-year 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. 
    To be sure, the price tags on RVs range widely. RV Retailer
sells everything from $10,000 teardrop shaped tow-along campers
to $1 million diesel motorhomes.
    Jason Lippert, chief executive of LCI Industries  LCII.N ,
the largest parts supplier to the RV industry, said he expects
supply chain problems to continue. But he does not see rising
prices softening consumer demand any time 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 aspect of rising prices could ultimately add headwinds
for the industry: gas prices, which have soared this year.  
    But James Boyle, a spokesman for the RV Industry
Association, said the industry does not expect current prices at
the pump to curb business anytime soon, noting that many RVs are
used for short trips and tailgating, rather than long road
trips.


    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Pandemic recreational vehicle boom    https://tmsnrt.rs/3dSAaKC
Staying ahead of inflation in the RV business    https://tmsnrt.rs/3s1psdf
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 (Reporting by Timothy Aeppel; Editing by Dan Burns and Dan
Grebler)
 ((Tim.Aeppel@thomsonreuters.com;))