(Reuters) - U.S. shipments of recreational vehicles are expected to drop more sharply this year than previously projected as a slowing economy and a tariff-fueled surge in material costs bite into sales, according to an analysis done for the industry’s main trade group.
RV shipments have fallen sharply just before the last three U.S. recessions, so the decline has raised red flags for the economy.
Manufacturers of the trailers and motor homes, many clustered in and around Elkhart, Indiana, are now expected to ship 401,200 units this year, a 17.1% drop from 2018. The industry previously projected it would ship 453,200 units, which would have meant a more modest 5.4% annual decline. (see graphic: here)
The analysis was done for the Recreational Vehicle Industry Association by Richard Curtain, director of surveys of consumers at the University of Michigan, who independently tracks the industry.
As part of the new forecast, Curtain expects the drop-off in business “will ease substantially in 2020.” Curtain projects shipments will decline 3.5% next year to 387,400 units. Until recently, the RV industry was booming. It shipped 504,600 units, a record, in 2017.
The industry’s woes illustrate how even the most “American” manufacturers can be heavily exposed to tariffs in a world of globalized supply chains. Tariff-related price hikes for everything from vinyl seat covers to metals forced many producers to increase prices to consumers over the past year. That contributed to a slowdown in sales and a rush to cut dealer inventories, according to industry leaders and outside analysts.
Although shipments continue to trend down, the RVIA said, “the RV market remains healthy and robust in historical context,” noting that if the latest projections prove correct, 2019 and 2020 would still rank, respectively, as the fourth and six best years for the industry.
(This story corrects paragraph one to U.S. shipments of RVs, not North American)
Reporting by Timothy Aeppel; Editing by Steve Orlofsky