Top comment from the seekingalpha article LM linked:
https://seekingalpha.com/article/4267177-rv-shipments-recession-predictor-refuses-take-monthRV shipments have declined but not in a manner that is telling us a recession is here or coming anytime soon, (maybe a slow down)? Granted, sales of Motorhomes and Fifth wheel units are seeing a slow down, but overall trailer sales are still in line. Our dealership has been up every month this year vs. YOY numbers from 2018. Last month unit sells were up 10% and F&I profits were up just over 10%.
Our net margins have declined to about 11% average for 2019 vs. 14% in 2018. Margin decline mainly is coming from myself reducing inventory on our lot, but we’ve offset that with F&I profits. My plan started last September and so far has played out very well. We are still in our busy season in the southeast and have a good 4 months left in 2019 to move volume and get our inventory where I want it. Overall our dealership should be inline with 2018 numbers. FYI, we have been buying new units every week, all year long.
As some have read my previous posts, we only sale affordable new and used travel trailers. This is one of the main reasons our dealership has always done well no matter the economy. The main reason I have been deleveraging for 9 months now is my concern on lending. The banks for several years now have been lending to customers with sub 600 credit scores, 30% of our loans are sub prime loans,(15%+ interest rates). My concern is when banks say, “no more loans”, then there goes 30% of our sales.
Regardless of what happens we will come out on the other side still selling campers to folks at affordable prices.
The slow down should only take 6 more months to correct itself and early 2020 dealers should have their inventory where they want it. I personally don’t see RV’s being sold at 2017-2019 volume for several more years, but regardless of the economy they will still be produced.
Departing statement;
As long as banks keep lending to sub prime customers and unemployment stays below 4.5% we will not see a full blown recession, only a slow down.
RSM
29 May 2019, 10:19 PM
Anecdotal yet interesting take.
