January '18

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114 • RV PRO • January 2018 rv-pro.com B U S I N E S S Jeff Olander, vice president of national accounts for Northpoint Commercial Finance in Alpharetta, Ga., says that company has seen both its dealer client list and the amount of business written with existing clients grow in 2017. "Not only have we signed up many dealers this year, but we've also increased almost every credit line for our existing dealer-customers during the year," he says. "We're assisting in not just their sales growth, but also in response to the changing needs they have, such as heavier ordering and longer backlogs at many of the manufacturing plants. "We expect those levels are likely to continue into the new year." Tim Hyland, president of the recreation and specialty vehicle group for Wells Fargo Commercial Distribution Finance, says the big question RV dealers are probably asking themselves at this point is whether the credit is going to keep up with the growth they're seeing in the market. "That comes back to the health of the industry, and the health of the economy," Hyland says. "Things are looking quite healthy for 2018, and the expectation is that credit availability for our cus- tomers is going to maintain itself in a good fashion." Strong Across the Board Nor is that the only area where credit is looking strong for dealers. Both Bank of the West and Ally Financial offer dealers consumer packages to help their buyers, and Lax and Thompson say things are looking strong in that por- tion of the credit market, too. Lax notes that Bank of the West is often at the top in terms of market share for RV loans to consumers, and he char- acterizes business on that side of the bal- ance sheet as "very good." "We're proud that we've been able to expand our business in that area in 2017," he says. "From that perspective, it's been a good year." Thompson describes Ally's consumer RV business as "strong" in 2017, and says dealers who offer choices in rates, structures or other options to their cus- tomers have continued to do well. How- ever, based on experience gained from the Recession, he says dealers need to remember to be prudent in the loans they're offering. "They need to collect down-pay- ments, whether that's cash or equity in a trade," he says. "They still need to watch advances so that people are bor- rowing the right amount of money on the right product and make sure they have the credit they deserve for what's truly a recreational item." Without that rigorous approach, lenders who might be too aggressive for the sake of chasing volume can still get themselves in trouble, Thompson adds, and Ally doesn't mind leaving a loan on the table if it doesn't meet its standards. "If we keep to our rigor, credit should remain available," he says. As Wells Fargo's Hyland noted previ- ously, a great deal of this rosy outlook is due to the strength of the economy and the strength of the RV industry itself. He cites the fact that the second and third quarters of 2017 reported a 3 percent rate of growth in the gross domestic product (GDP) as one example of the country's economy strength. "If you look at 2017, GDP is expected to come in around 2.2 percent," he says. "If you look forward to 2018, that's expected to grow to somewhere near 2.6 percent, so you're seeing a strong economy that's looking to improve a little bit in 2018." At the same time, while the Federal Reserve Board was expected to increase interest rates by another 25 basis points before the end of 2017, with an addi- tional 50-75 basis points anticipated in 2018, that's not seen as a major concern. "The Fed's target for inflation has remained around 2 percent, and we've been a little below that," says Hyland. "If you look forward into 2018, I think expectations are that inflation will be around 2 percent, but that should only have a small effect on short-term interest rates and will likely not have a significant impact on longer-term rates." Lax mentions several other factors at work currently, including wage growth, lower debt-to-income-levels, low unem- ployment and a rising stock market to argue that consumer confidence is also relatively strong. Tim Hyland of Well Fargo Commercial Distribution Finance says that, heading into 2018, signs point to a healthy RV industry as well as a strong overall U.S. economy.

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