b'GUEST VIEWThe Stagnant RV Market Will Continue Through 24 The cash crunch at RV dealerships has escalated over the past 12 months andGregg will likely continue into the future. Margins on sales have dropped, costs of nearlyForeeverything has risen, and maintaining safety in cash flow is more critical than ever.As I review the RV market envi- was up 50%; slowing sales meantdroppeddramaticallyinrecent The auto industry is mired in a ronment, both in historical and fu- curtailments were coming due onmonths reducing available cash forslump, not unlike the RV industry, ture terms, I have concluded that wefinanced inventory; labor and otherconsumerpurchases.Today,thewithlittlehopeofanynear-term are mired in a longer-term stagnatecosts were increasing and marginsconsumer is taking on more debtgrowth, as well as being caught in marketthaneveryoneoriginallywere decreasing rapidly from all- and reducing savings to maintaintheEVrevolutionanexpensive forecastat least through 2024.time highs.lifestyles.Meaningtheyarelesstransition. The overzealous market resultingA cash crunch was in the making.likely to splurge on a new or used Housing markets continue to be from COVID stole future purchases.As OEM production slowed as aRV.plagued with rising costs, high inter-People, because of the COVID enig- result of dealers reducing inventory,The cash crunch at RV dealer- est rates, and a declining propensity mas,werealreadytrendingtoRVthesupplychaincaughtupand,ships has escalated over the past 12of the consumer to purchase. purchases but moved them ahead aswhile material costs continued tomonths and will likely continue into The political environment head-one way to deal with COVID. At theescalate, the increases did slow sig- the future. Margins on sales haveing into an election year has no pos-time, many believed that the marketnificantly. OEMs in declining mar- dropped, costs of nearly everythingitivesattachedtoit.Thenation had expandedand there was someketsalwaysseemtoreverttothehas risen, and maintaining safety incontinuestobepoliticallyand expansion because of COVIDbutsame methods used in past periodscash flow is more critical than ever. philosophicallysplit,causingun-it appears that the majority of the de-contenting products, using lessSome dealers will see the handwrit- easiness in all markets. increased sales may have been a re- expensive substitute materials, etc.ing on the wall and close voluntarilyReviewing the RVIA shipment and sult of consumers pulling their pur-all in an attempt to buy shelfratherthanlosetheirentireper- publishedretailregistrationdata, chases forward.space at their dealers and keep fac- sonalassetbase.Otherswillbethe distribution channel will have Consequently, when the impacttories running at some level.forced to do the same as cash flow80,000-plus fewer RVs in inventory of COVID ebbed, volume declinedWhile racing to the low end al- reaches critical levels.at the end of 2023 than it did one more than expected because of theways has some level of success in aSo, in 2024 the RV industry willyear ago, so dealers have made bold moved-forwardpurchases.Asastagnant market, that ploy also hasend up with fewer dealer outlets movestorestructureinventories result, along with other macroeco- limits. And I believe there are fewand a higher percentage of largerand costsyet in many cases, they nomic impacts, retail sales has seenlong-term benefits of the low-pricedealers, meaning the consumer willhavenotyetcaughtupwiththe a rather steep decline over the paststrategy because, as consumers con- be forced to work harder to make amarket slowdown. It is nearly cer-18-24 months.tinue to desire features, they are lesspurchase and to get service. OEMstain that in calendar 2023 shipments While retail sales were declining,attracted to de-contented vehicles.willhavefeweroutletsfortheby OEMs of new units will not reach dealerswereadjustinginventoryYes,therewillbesales,butlittleplethora of brands they have intro- 300,000 units. levelsfromall-timehighstonewmarket growth.duced but will strive to keep brandsRetail registrations for 2024 will levels not predictable, as the marketMostly, dealers and manufactur- alive by either shaving margins andlikely be in the 300,000 to 330,000 was difficult to read and inventoryers will be treading water waiting fordiscounting, de-contenting, or all ofrange,afurtherreductionfrom expenses were rising.the next market recovery.the above.2023. As dealers fought to reduce in- BecauseofallthegovernmentNiche products will likely becomeShipments of new RVs to dealers ventories of higher-priced COVID- programs surrounding COVID-19,more important as well. It is toughfor 2024 will be in the range of a eraunits(particularly2022the Money Supply (M2) index, roseforlargeOEMstoprofitinnichenumber equal to 85% to 90% of re-models), inventory and operatingto record levels and provided plentymarkets as these markets are nor- tail registrations, so expect a contin-costs at dealerships were rising atof cash in the economy. Most of itmallybetterservedbysmaller,ued drop in dealer inventories that an alarming rate: floor plan interesthas now been spent, and M2 hasmore-focusedOEMswhodonotisdueprimarilytocontinuedex-need large volumes to thrive.pense reduction by dealers as well The macroeconomic headwindsasareductioninthenumberof continue to blow, making RV marketdealer storefronts. growth difficult in the short termInsummary,thenext12-18Consumer interest rates showmonths will be a continuation of the nosignsofreducinginthenearrough ride we have been on the past term.24 months. It will take some creative Wholesalefinanceratesalsomarketingandpositioningfor show no signs of reducing soon.OEMs, suppliers and dealers to gainLower margins on lower salesmarket share and maintain needed willcausecontinuedcashflowprofits and positive cash flow. problems throughout the distribu- Yet, as always, opportunities to tion chain.outperformtheindustryalways Consumersentimentindexesexistforthosewhofindnewand have been decreasing for over fourbetter products and services. months and are likely to continueThe industry must stay united if decreasing, or at least stay stagnantany attempts to grow the market in the days ahead, based on the con- are to be successful, while at the sumersdissatisfactionwiththesame time working hard to com-economy.pete with their industry partners.Two regional wars in the worldAll-new alliances will be formed in will continue to need focus and re- the days ahead, which will trans-sources, along with the U.S. borderform products, markets, and distri-issues, and further disrupt the econ- bution. omy if they continue without reso- lution.GreggForeistheformerpartnerInflation has, and will, continueofG&GMediaGroupLLC,which to be a growing tax on the Ameri- publishesRVBusiness,Woodalls can people and economy; workersCampground Magazine and AtThe-wage demands, while necessary, willCampsite.com. Fore is also the former simply add to the inflationary pres- president of Dicor Products, served for sure of all goods and services; sup- 19 years as a board member of the RV ply chain problems, while certainlyIndustry Association, including two improved, have not yet healed andyears as chairman, andis a 2018 in-are certainly not ready for a growingductee into the RV/MH Hall of Fame.economy.WCM26 January 2024Woodalls Campground Magazine'