CIT Recreation Vehicle Outlook

RV Shipments Remain Strong Despite Stock Market Stumble

Shipments Expected to Rise to 334,000 This Year

Despite the recent stock market stumble the RV industry remains strong with an increase of four percent in RV shipments expected this year, according to the CIT Sales Financing Recreation Vehicle Outlook. In spite of an initial prediction of a downturn in shipments, the figures now point to four percent increase to 334,000 units, with a predicted 1.8 percent rise next year.

Michael Paslawskyj, vice president of Economic Research at the CIT Group, said, "We expect that both subcategories will continue to grow during the outlook period and reach their highest levels in 20 years. Motorhomes should see shipments grow 7.5% this year and 2.6% next year. At the same time, towables will also see an increase of three percent in the current year and 1.6% in the next year."

The steady shift towards motorhomes will continue through the year and into 2001 because they have become the RV of choice for retirees, many of whom are baby boomers and are significantly wealthier today than the retirees of the 1980s. Shipments of motorhomes rose almost 12.8% last year to 71,600 units and are expected to reach 77,000 units in the current year and 79,000 in the next. Going into 2001, demand may moderate if the economy slows.

The Wealth Effect

In recent years the wealth effect, created by soaring equity values and rising home prices, has had a profound effect on the market. Between the late 1970s and 1995 the major factors determining RV shipments were real GDP and real gasoline prices. Today, however, the significance of real gas prices has diminished and is replaced by real household net worth. There are three reasons for this shift.

First, gas prices have remained consistent through the 1990s and are well below their early 1980s and Gulf War period levels.

Second, the proportion of income spent on gasoline has also been dropping and has become less of a factor when making the purchase decision.

And third, the purchase of an RV has become a lifestyle decision, driven by increased wealth.

RVN