EXCLUSIVE: Dealers Discuss Supply Chain Today

A picture of TRG CEO Kathryn Thompson, color version

RV dealers surveyed by Thompson Research Group (TRG) in the second quarter reported continued record-low inventories and long delivery lead times. Yet the worst impacts of supply-chain bottlenecks might be passed.

“I think right now it does appear the worst is behind us in terms of being panicky over the supply chain and labor issues,” TRG founding partner and CEO Kathryn Thompson said. “We are not out of the woods yet, but it seems like the worst is behind us. People have figured out how to problem solve and people are starting to fulfill orders that have been placed.”

Every dealer TRG surveyed reported RV deliveries were delayed in the second quarter, with 70% saying RVs arrived with alternative products installed.

Most dealers (55%) said RV lead times from manufacturers were at least six months, with 18% each saying 4-5 months and 3-4 months.

No dealer surveyed said inventories would return to normal in 2021. Most dealers (58%) said normal inventories would return in late 2022, with 17% saying early 2022 and a quarter of respondents saying normal dealer inventories were a 2023 story.

Despite the long lead times, Thompson said dealers reported the beginnings of a return to deliveries.

“Some of the orders that have been lingering are being fulfilled,” she said. “The bigger dealers generally are getting what they need. The smaller dealers are not getting as much, but that is to be expected. Previously, the bigger dealers were not getting what they needed.”

Demand reportedly remains strong. Dealers surveyed said 67% found new towable sales up in the past 30-60 days from the same time a year ago, with 50% reporting new motorized sales higher. On the used sales side, 70% said towables sales were up from a year ago and 60% reported motorhome sales higher.

Persistently high demand is keeping manufacturers from aggressively taking down backlogs, TRG reported. However, Thompson said the process is underway.

“There is a path now and people were unclear what that path was before,” she said. “You are chipping your way through. If you just look at Thor, for many years, its backlog had not cracked a billion dollars. Now you are well beyond that.”

Still, she cautioned against manufacturers overreaching to fulfill demand. As demand outpaced wholesale RV shipments in unusual RV cycle periods, manufacturers have been under pressure to increase capacity.

“The industry still has to be very careful in managing inventories,” Thompson said. “I have seen this too many times.”

Dealers expressed concern over some supply chain fulfillment. One dealer in the South reported customers who ordered RVs in June 2020 who still have not received delivery. Another in the East said lead times today were longer than at the height of 2020 due to parts constraints.

Finally, dealers reported 2021’s outlook to be similar to 2020. Although inventories eventually were depleted, numerous dealers reported starting 2020’s rush with more RVs on the lot, leading to greater sales. This year, dealers said, sales are up but with fewer RVs on lots to move.

“Sales are better than last year right now,” one dealer in the South reported, “but getting to the point where we don’t know how the next six months are going to go because of inventory and the supply chain.”

TRG is an equity research and advisory firm founded in 2009 providing an independent third-party view of the construction and industrial value chain. Thompson has covered the RV industry since 2000. Parties interested in the company can find more information by visiting www.trg.co or calling 615-891-6200.

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