The motorized recreational vehicle (RV) and non-motorized or “towable” RV market, hindered by a slow economy, is expected to pick up speed over the next five years, growing 5% and reaching $15.9 billion, according to “Recreational Vehicle Manufacturing in the U.S.”, a new report from market research publisher SBI.
Trailing the 3% spike brought on in late 2005 and into 2006 by FEMA purchases for Hurricane Katrina victims, 2006 ended flat with a less-than-1% loss, closing the year at $12.3 billion. Higher interest rates, higher gas prices and a slower housing market are expected to continue restricting consumers’ RV purchases through 2007, dropping the market nearly 4% to under $12 billion.
Barring any major hiccups in the economy or any other unforeseen events, however, SBI projects that the market will absorb excess RV units from Hurricane Katrina by 2008, and growth of 8% to 10% will resume during the next three years, topping the market out at 431,000 units and $15.9 billion by 2011.
Nevertheless, even marginal rises in interest rates could cause severe pain for consumers. RVs purchases, which can cost in excess of $100,000, are often treated as second homes. Interest can be deducted, somewhat offsetting the impact of rising rates, but not completely.
“The real health of the industry is directly affected by consumer confidence, interest rates and the cost of fuel,” notes Tatjana Meerman, Publisher of SBI. “A strong economy is the industry’s best friend. When interest rates rise, RV purchases decline.”
Source: SBI. (July 24, 2007). “U.S. Recreational Vehicle Market Expected to Regain Momentum by 2008 and Coast to $15.9 Billion by 2011.” SBI press release courtesy of PR Newswire.