RV industry revolves around US shortages, inflation

PHOTO FILE: A pair of Winnebago motorcycles ready for sale at a dealership in Golden
FILE PHOTO: A pair of Winnebago motorcycles are ready for sale at a dealership in Golden, Colorado June 23, 2016. REUTERS / Rick Wilking / File Photo

December 14, 2021

By Timothy Aeppel

(Reuters) – The entertainment industry has done what many American businesses have done in the face of severe commodity shortages and rising inflation this year: Offer more products and earn more money than ever.

Winnebago Industries Inc reported record fiscal 2020 revenue in October – up more than 50% year-over-year. On Friday, it is expected to post a second straight quarter of revenue above $1 billion and a 33% increase in earnings per share, according to analyst estimates compiled by Refinitiv.

Thor Industries Inc, the largest manufacturer, last week reported record results for its first fiscal quarter while noting that the company’s backlog as of the end of October was more than $18 billion – a 100% increase. compared to a year ago.

Michael Happe, chief executive officer of Forest City, Iowa-based Winnebago, said in an interview that his company’s retailers have “been able to optimize retail prices in a way that they can’t yet. for a long time”.

The RV industry is a prime example of how much U.S. manufacturers have been able to thrive despite the COVID shortages associated with rising prices for raw materials, from steel and plastic to electronics and Styrofoam. The spike in RV sales began early in the pandemic, as anxious Americans found ways to travel without the risks like staying in a motel or taking a plane.

(Graphic: The entertainment media boom during the pandemic,

All types of outdoor industries have exploded during the pandemic. Sales of swimming pools, boats and all-terrain vehicles all spiked after the initial closure.

Labor shortages are also plaguing the industry, which has struggled to fill jobs in manufacturing hubs like northern Indiana, where Thor is based.

Despite all these hurdles, the industry is producing and shipping more than ever before. Wholesale RV shipments in North America are expected to hit a record 602,200 units this year – up 40% from 2020 and 19% higher than the last record high set in 2017, according to an analysis prepared for the RV Industry Association. Analysis by ITR Economics forecasts a smaller 2% increase in 2022, to 613,700 units.

Jon Ferrando, CEO of RV Retailer LLC — a Fort Lauderdale, Florida-based retailer with 90 stores in 26 states by the end of the year — said raw materials are more expensive, along with labor costs. and higher shipping to move motor homes and trailers across the country from the factory to his store – meaning more price increases are passed on to the consumer, rather than the usual adjustment each year once.

(Graphic: Getting ahead of inflation in the RV business,

“Definitely, this year, there are more frequent price corrections,” he said. However, he added that the increase has not curbed buyers’ appetites.

“To the extent we have upward pressure on prices, consumers have the ability to lower prices and get the prices they want,” he said.

To be sure, the price tags on RVs fluctuate widely. RV Retailer sells everything from $10,000 teardrop campers to $1 million diesel-powered motorcycles.

Jason Lippert, chief executive officer of LCI Industries, the largest supplier of components to the RV industry, said he expects supply chain problems to continue. But he doesn’t see rising prices going to dampen consumer demand any time soon.

“If you’re a first-time buyer, you’re not looking at what you can buy in 2018 or 2017,,” he said. “People who buy their second or third RV will probably think about price a little more.”

One aspect of the price hike could end up causing problems for the industry: gas prices, which have skyrocketed this year.

But James Boyle, a spokesman for the RV Industry Association, said the industry does not expect the pump’s current prices to curb business any time soon, noting that many RVs are used for trips take short and long trips, instead of long road trips.

(Reporting by Timothy Aeppel; Editing by Dan Burns and Dan Grebler) RV industry revolves around US shortages, inflation

Bobby Allyn

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