January '18

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rv-pro.com January 2018 • RV PRO • 115 "In fact, I'd call it in really good shape," he says. "Both the stock market and rebounding real estate prices are causing people to feel their net worth is more, and when consumer confidence is strong, it helps drive the RV market." Good News … and Growing As solid as those economic numbers are, the RV industry also is benefitting from some unique strengths of its own, some of which have been influenced by outside forces, and some which have not. Probably the best news is that the market for RVs has been growing. "The RV industry has done a good job of expanding its customer base," says Lax. "They're bringing in new buyers. Unlike the auto business – which is mostly a necessity product and largely driven by replacement cycles – not everyone owns an RV, but if you can expand the number of buyers, you can expand the market." While Wells Fargo CDF's Hyland men- tions the retiring Baby Boomers, he also cites the entry of Millennial buyers into the market, as do Lax and Ally's Thompson. "We're seeing much younger buyers coming in," says Thompson. "This is a recreational item, and more people are seeing this as a way they want to spend their recreational dollars." Thompson adds that low fuel prices have been helpful, as well. And, Lax notes that the industry has helped itself by developing smaller, more compact RVs and trailers that appeal to the younger generation. Northpoint's Olander also points out the RV Industry Association is working closely with the federal government to upgrade and increase the availability of campgrounds across the U.S. "Availability is huge," Olander says. "Not only nice campgrounds, but those that have amenities RVers want to enjoy, including in terms of technology. I know they're working closely with (U.S. Inte- rior Secretary Ryan) Zinke and his team on that." The result: Inventories are showing a very positive turnover rate and aging lists are down. Thompson says the RVIA lender survey shows the turn rate at about two-and-a-half times a year – with some dealers turning their stock faster than that. "Shipments are up, retail sales are up, and if inventories remain fresh it means the product is moving through the channel and into consumers' hands," Thompson says. "They're not only serving their customers, but they're selling parts and accessories." Of course, there is a potential down side to that. Olander says in some instances, manufacturers are backlogged, although many are expanding to meet the increased demand. "We're seeing our dealers ordering more and ordering heavier, because if they don't, they may not get the units they need on a timely basis," he says. "It's important for dealers to make sure they have the inventory necessary to capitalize on such positive markets." Still another trend that these lenders are seeing is some consolidation in the dealer market, which may or may not be a bad thing. Bank of the West's Lax observes that the biggest consolidator in the dealer segment has been Camping World. "That has led to some other dealer groups to say that to compete they must acquire and consolidate as well," he says. "There's some of that going on, with the small mom-and-pop operations getting caught up in that." However, Ally's Thompson says that's not necessarily a bad thing. "Large, well-capitalized dealers that have had strong, profitable years are taking advantage and investing in their businesses," Thompson says. "The value of RV dealers is at a high, and for what are typically family operated stores, they see this as an opportune time to sell at a premium." It's that glass-half-full mentality that seems to be ruling the market right now. Overall, feedback these lenders are receiving from their dealer-customers is positive, and Northpoint's Olander says the lender has been adding sales personnel as well as credit and oper- ations staff to support the growth its enjoyed in 2017. Or, as Thompson puts it, "There have been smiles on their faces. They know things are going well right now and they want to make sure that lasts as long as possible." Bank of the West's Michael Lax (third from left) and his team members reported having a good RVIA Show. Lax says there is plenty of optimism as the industry moves into 2018. BANK OF THE WEST PHOTO COURTESY OF BANK OF THE WEST

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