Priority RV OEM Panelists Agree with RVIA’s 2023 Forecasts

One of the highlights of the recent Priority RV Network annual conference was a panel discussion with three prominent manufacturers: Bob Martin of THOR Industries, Don Clark of Grand Design RV Co. and Doug Gaeddert of Forest River Inc. (Photos by Adrienne Angelo for RVBusiness)

When can the North American RV industry expect a return to a more normal pace of business?

That’s the main question on everyone’s minds these days and one that three RV manufacturing executives addressed last week (Thurs., April 6) during a panel discussion at the 2023 Priority RV Network’s annual meeting in Las Vegas. But the OEM panelists, including THOR Industries Inc. President and CEO Bob Martin, Grand Design RV President Don Clark and Forest River Inc. Divisional General Manager Doug Gaeddert, obviously had no concrete answers because there are simply too many unknowns on the table.

Also on Thursday’s Priority agenda was speaker Scott Anderson, chief economist and executive vice president for Bank of the West.

Don Clark

“I think we’re going through a resettling stage right now,” said Clark from the stage of the M Resort Spa Casino, who, like the other two panelists, took a frank approach to the current, relatively soft state of the RV wholesale and retail market. “Over such a long run of a boom economy and boom RV sales, everyone knew that that (brisk sales) trend wasn’t going to last forever.

“So, I think we’re going through a resettling stage where many of you took on products in some cases just because of the volume of people (consumers) who were discovering the RV lifestyle (over the past couple of years),” added Clark, whose Middlebury, Ind.-based company is a division of Winnebago Industries Inc. “And even though the economy is slowing, I think we’re getting back to a new norm, whatever that’s going to be, where I think dealers are going to settle on the partners that they do business with and maybe go deeper on those in the overall brands that they represent. And it (a downcycle) was going to happen, right? So, again, I think we’re going through a resettling stage.”

So, when, asked Martin, does the industry get back to 2017 sales and production levels?

“That’s probably the big question,” he maintained, “because we know that ’21 and ’22 were some incredible years for everybody in this room, all of us. But when do we get back to more normalized production and retail levels? That’s the tricky part. And for us, I think it’s meetings like this, meetings that we have with our dealer partners every day, just trying to work through this.

Bob Martin

“We’ve seen the signs on the horizon at THOR,” he added. “We have economists. We’ve looked at a lot of these same things, and we know that this year’s going to be tough. And so we really need to help work with the dealers and focus on ’22 model year inventory. We know that’s very important to everybody — and just figure out what that correct leveling state is. But as the economist just pointed out, there’s just a lot of unknowns. So, I think for all of us to remain cautious is a big thing. And just working together, we’ll find the answers. But right now, I don’t think there’s anybody in this room that really knows.”

Gaeddert, whose towable RV-building Forest River division is headquartered in Goshen, Ind., emphasized that both OEM’s and dealers are coping right now with excess inventory, much of it aged and over-priced. The big question is how much progress the industry is making in its overall effort to turn this situation around.

“Those are challenges that everybody’s saddled with,” said Gaeddert, “and the main question is where we’re at right now on that correction. When you look – and we’ve got an interesting perspective because we look at a lot of different dealerships — I think we’re making initial progress on step one, which is to get the dollars and the overall inventory levels into line (at the OEM level). And I think that that next key step is to get the balance of the inventory back into line as an industry as well, which is going to also play a role on terms and margins.

Doug Gaeddert

“Again, I’d like to think we’re past the third inning on all that, and I know we’ve cranked up the intensity as an industry from a focus standpoint,” said Gaeddert. “But it was interesting when you look at the charts that the professor (Bank of the West’s Scott Anderson) had up. We see things a little bit the same way – not exactly the same — but I foresee the fourth quarter of this year as being the opportunity we had to start to beat, slightly, some of the year-to-year, same-month comps as an industry. By then we ought to be somewhat balanced and seeing a slight year-over-year uptick. And, then, rolling into 2024, we obviously ought to be beating the hell out of what we’ve done the first two or three months of this year.”

All three OEM execs figure the RV Industry Association’s (RVIA) recent forecast of 324,000 to 344,000 shipments by the end of 2023 — a 32% drop from 2022’s 493,000 wholesale shipments and a rather precipitous decline from 2021’s record 600,000-plus units – as not far off the mark. “So, I think actual year-end shipments will probably total the lower side of that RVIA projection,” said Gaeddert, “and I think they’ll be a little bit higher than that when it comes to actual retail sales.”

Meanwhile, economist Scott Anderson doesn’t foresee a particularly quick RV industry turnaround due to the impact of the Fed’s “aggressive” interest rate hikes.

Scott Anderson

Instead, he anticipates an overall recessionary belt-tightening over the next quarter or two. “And then I think we’re off to a better 2024,” he speculated. “But it could have been a lot worse. This is a very mild downturn by historical standards, and we (the general economy) did drop last year for a couple of quarters. So, it’s really not much of a difference from the environment we’ve been in over the past year with a little bit less inflation this time around.

“But we are on this path where the downward pressure continues this year,” Anderson said from the Priority podium. “We’re looking at 0% growth year over year for GDP, and consumer spending will be very weak, but then we move back up.

“I don’t know what to think when somebody asks me, ‘when are we going to get back to normal?’ because those peaks are going to be hard to recreate and they might have been a once-in-a-lifetime event,” he added. “But I think by late 2024 or early 2025, things are going to be looking a lot better. So, you’re going to have to manage your business so you can make it through the next 12 to 18 months as we work through these cross currents in the economy as we walk the bridge between recession and high inflation. And, hopefully, we’ll come out better on the other side.”

Source: https://rvbusiness.com/priority-rv-oem-panelists-agree-with-rvias-2023-forecasts/