Dr. Richard Curtin
While the RV industry is resilient and eventually will recover from this pandemic-induced downturn, it will be a “long and bumpy road,” said Dr. Richard Curtin, a longtime RV industry analyst and director of the Survey of Consumers at the University of Michigan.
Speaking Wednesday (April 15) during a webinar hosted by the RV Industry Association (RVIA), Curtin refrained from offering a forecast of wholesale shipments in 2020, saying it will likely bottom out in the current second quarter. But any improvement through the rest of the year will hardly approach the 406,100 units that were shipped in 2019.
“The most important point is consumer preference for the RV lifestyle will prevail, but the road back to record sales will be slow and bumpy,” Curtin said.
“The desperation among both consumers and small businesses has rarely been seen on the American landscape. No recession, not even the Great Recession of a decade ago, comes close,” he added.
Right now, he suggested, consumers feel that health is their No. 1 concern, not their financial situation. Consumer confidence will return only when people feel safe, he said repeatedly.
“To be sure, everyone wants a quick restart to the national economy. But not if it would burst another wave of rising coronavirus infections and deaths,” Curtin said.
“At some time in the future, consumers will move from mainly being concerned about the health impacts of the pandemic to the financial impacts of the pandemic. But that’s not happened yet,” he continued. “I have no doubt that medications will be forthcoming to limit the health consequences and a vaccine will be developed that puts an end to this crisis.
“But in the meantime, difficult decisions need to be made on what would constitute an acceptable infection and death rate before the economy can be reopened,” he added. “This standard will not be national. It will differ across states, industries, and across different consumers. The RV industry will need to make a decision about reopening plants carefully considering the health and well-being of their employees, the state of the dealer network, existing inventories, and the expected strength in consumer demand.”
Reopening plants in and of itself will present certain challenges, Curtin pointed out. Employers will need to institute “unusual precautions” that will take some time to implement and adjust to.
“Who could have imagined a year ago that rather than welcoming back employees to work by handshakes, employees will be asked to submit to medical tests before beginning work?” he said.
The line graph charting this recession, Curtin suggested, will be “unlike any other past recession you’ve experienced.” It will start with a sudden collapse of the economy establishing the “trough,” or its lowest point, most likely in the current second quarter. Curtin expects a minimal “bounce back” in the third quarter of perhaps 5% – which will coincide with the November presidential election and will likely be politicized, he inserted – but any improvement would hardly be of any real consequence.
“Most people now talk about a ‘V recession’ where we have this tremendous fall-off in economic activity, and we’ll have a tremendous return as soon as the third quarter starts. I don’t think that is true,” he said.
“What we’re more likely to see is an ‘extended U,’ where the downturn exists through most of this year and it starts to improve slightly and consistently in the next year. But it will hardly be higher than it was in 2019,” he added.
Because of this, he predicted that the consumer demand for an RV loan will be less than the lenders’ supply of available loans.
“Family finances have been devastated, and delayed payments on rents, mortgages, or other loans that face consumers will continue their financial difficulties long after they’ve regained their lost jobs,” he said.
This, in part, is why he favors the additional $250 billion in relief, currently stalled by a divided Congress, that would supplement the CARES Act, Paycheck Protection Program and other federal and state relief efforts.
“The risk of doing too little is far greater than the risk of doing too much,” he said.
A major factor in any recovery for the RV industry is the re-opening of North American campgrounds, Curtin emphasized several times. He called on the RV industry to advocate on behalf of the campground sector and call for them to re-open under recommended precautionary guidelines, such as fewer occupied campsites to promote social distancing.
Curtin also suggested companies begin to start crafting a message promoting the RV lifestyle as a safe recreational outlet. He cautioned against a message that appears to exploit the situation, but instead presents an RV as a relatively safe, yet enjoyable, way to recreate.
“Now is a good time to slowly ramp up and create a favorable message of product, and build interest for when they get to the purchase decision,” he suggested, adding that he agrees the post-pandemic environment would compare favorably with that following 9/11, which saw a spike in domestic tourism in general and RVing specifically.
Likewise, Curtin predicted marketers craft their message to Millennials, as they might be more apt to purchase an RV. The pandemic, Curtin said, has had a “deadly impact on Baby Boomers.”
He noted there will be an increase in the used RV market as families, financially concerned yet still intent on buying an RV, might gravitate toward the lower cost of a previously owned unit. Similarly, cash-strapped families might look to sell their RVs, he said.
As such, Curtin suggested manufacturers look to build less expensive RVs. He said consumers, especially Millennials, will still expect technology in RVs. But the extraneous “bells and whistles” can be eliminated in favor of cost reductions.
“Low tech is hardly a selling point, unless you go very low and that’s hardly a sizeable market.”
In other comments, Curtin called for consumer and wholesale lenders to be “lenient,” and encouraged the industry’s floorplan lenders to look at dealers’ 2019 statements for their performance ability.
Also, while he acknowledged RVs can be called upon for disaster relief, Curtin felt any such effort would need to be federally funded for it to truly have any impact for the industry. State and local governments are not in a position to fund or orchestrate such a program, he said.
