GE exit from boat lending bad, but won't sink sector

By James B. Kelleher

CHICAGO (Reuters) - General Electric Co's (GE.N: Quote, Profile, Research, Stock Buzz) decision this week to no longer lend consumers money to buy motorhomes and boats was more bad news for the recreational vehicle and boat industry.

While the move by GE Money is likely to prompt the many other lenders in this sector to tighten credit standards and push borrowing costs higher, analysts say it won't significantly worsen the industry's admittedly dismal fundamental outlook.

Even before GE, which operates one of the country's biggest and most sophisticated finance companies, announced its intention to exit the retail RV market, rising gasoline prices, falling home values and tightening consumer credit had taken their toll on motorhome and boat sales.

In March, the most recent month for which data is available, RV industry wholesale shipments fell 17 percent, pulled down by a 27 percent decline in motorhomes and a 36 percent drop in shipments of the very biggest and most profitable vehicles.

Year to date, motorhome shipments have tumbled 24 percent and towables are down 14 percent as the U.S. economic downturn has eroded consumer confidence and kept buyers out of RV showrooms.

The recreational marine business is in the midst of a downturn that is just as stark.

Earlier this month, MarineMax Inc (HZO.N: Quote, Profile, Research, Stock Buzz), the nation's largest boat retailer, said its sales in the latest quarter tumbled 28 percent. Those declines come on top of the 13 percent decline in powerboat wholesale shipments the industry suffered in 2007,

"Same-store sales of boats have been horrendous," says Marisa Thompson, an analyst at Morningstar.