U.S. RV Makers See Sharp Drop in 2007 Sales

By James B. Kelleher

CHICAGO, Fri Nov 17, 2006 2:10pm ET(Reuters) - U.S. recreational vehicle makers expect shipments to dealers to drop more than 11 percent in 2007, the head of their trade association told Reuters on Friday, after posting record numbers two years in a row on sales related to disaster relief.

In an interview, Richard Coon, president of the Recreation Vehicle Industry Association, said manufacturers expect to ship 341,900 motorhomes and trailers in 2007, down 11.3 percent from the 385,500 they expect to ship this year and the 384,000 they shipped in 2005.

The RVIA, which represents RV manufacturers and suppliers, will release its forecast at an industry trade show later this month in Louisville, Kentucky.

Coon said the anticipated drop, while dramatic, reflected a return to normal after two years when the industry's results were lifted by sales to the U.S. Federal Emergency Management Agency and other relief organizations responding to Hurricanes Katrina and Rita, which slammed into the U.S. Gulf in 2005.

"This industry produced about 115,000 units for Katrina," Coon told Reuters. "Next year's going to settle back down to what the business is like."

Even with the anticipated fall, Coon said 2007 would be the industry's fourth-best ever. And he said he remained confident about its longer term prospects -- despite higher interest rates and gas prices and the slowdown in the U.S. real-estate market, where many customers had been borrowing against the rising value of their homes to finance their RV purchases.

He said that since 1980, when manufacturers shipped 150,000 units, the industry had grown at a compounded annual rate of 1.9 percent, ramping up production, on average, 8,000 units a year. He said he expected that growth rate to "tilt up" in the coming years as the baby boomer generation ages.

"They love the lifestyle," he said, "and they have tremendous buying buyer. They have a lot socked away."

So far this year, retail sales of towable trailers are down 1 percent in the United States and sales of the largest, so-called Class A, gas-powered motorhomes are down 20 percent year, according to data released by Statistical Surveys Inc., an industry tracking firm.

But Coon said RVIA's own numbers, which count wholesale shipments rather than retail sales, painted a much brighter picture.

Including shipments to Canada, where the Alberta oil sands boom is creating strong demand for temporary housing, as well as dealer inventory purchases to replenish showrooms depleted by FEMA purchases, RVIA said wholesale shipments of towables were up 11.9 percent so far this year, offsetting a 11.6 percent decline in motorhome wholesale shipments.

Even so, he acknowledged that towable shipments were slowing and said he expected the trend to continue well into 2007, contributing to next year's sharp drop.

"We think the motorhome side of it has bottomed out." Coon said. "We think you won't see that deteriorate more from where it is. We don't think it's going to grow much. But we don't think it's going to continue falling (double digits)."