As indicated by the typical company data, the demand for RV of major manufacturers and retailers has grown very fast in the past three years probably as a result of increased income of consumers and increasing availability of credit.

Sector’s Current, Trend, Causes behind trend, and Future

Current and Trend

1. The demand for RV has been growing fast in the past several years. Lower price and smaller towable trailers seems to contribute most of growth. Motorized trailers present similar trend as towable trailers.

2. However, Growth of demand for relatively cheaper towable trailers may be slowing down as indicated by slowing down same store revenue growth of dealers. While the sales in the whole industry have kept increasing it seems that the growth drivers have turned to undeveloped regions, which caused more costs.

3. The growth in manufacturers’ shipment has been supported by the retailers’ data in the past several years. However, as sales slowed down the demand for inventories of dealers may be not as fast as it is before.

Causes behind the trend

1. Generally, the demand for recreational vehicles has been related to consumers’ income and other macro-economy factors.

2. Sales growth has also benefited from credit availability across the whole industry.

3. Demographic factor and fuel price have also influenced performance of RV sales.

Industry Future

1. Companies may find that demand will continue to be strong but the growth in demand may slow down.

General Financial Performance of Companies In the Sector

It seems that the demand for towable trailer provided by companies in this sector has been very strong and kept increasing in the past several years as indicated by the average annual growth of about 16% in wholesales shipment and average annual growth of 11% in retail units. The demand for motorized trailers seems not to be as fast as it is for towable but presents a similar trend as it is in towable trailers sector. The growth in sale volume in towable trailers seems to come mainly from smaller and lower price products at the beginning but has presented a strong signal that the demand is expanding into higher price products. The growth in manufacture’s sale has been supported by the sales in retailers. However, it seems that the major driver of growth in retail has shifted from same store sales to new opened store sales. Therefore, it may mean that the undeveloped market or potential consumers are becoming smaller and a signal that the growth in sales may slow down soon.

Strong growth in revenue helps companies improve their profitability. But the increasing raw materials cost that the component suppliers and manufacturers are causing huge pressure on the profitability of the whole industry. The typical gross margin is about 22%, 15% and 29% for supplier, manufacturers, and dealers in 2018. With a SG&A as percentage of sales of 13%, 6%, and 21% respectively the operating margin is about 9%, 9%, and 8% in 2018. The typical enterprise price/EBI ratio is 18,12, and 16 for component supplies, manufacturers, and dealers.

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