Though RV sales and financing volume is tracking lower than last year, lenders are upbeat about overall volume ahead of the May buying season, they told Powersports Finance.
Tom Wirth, managing director of RV and marine finance at Huntington National Bank, pointed to the RV Industry Association’s prediction that 2019 is expected to be the third best sales year since the 1970s. “2017 was a high-water mark,” Wirth told PSF. “ was a drop of approximately 5% off that high. The RVIA predicts this year to be 4.9% lower than last year. But if you think about it, those three years are just really good years, so it’s still a very robust year from a sales perspective.”
Specifically, the RVIA projects that 460,100 units will ship by yearend, compared with 483,700 units in 2018. The consumer buying season for RVs typically runs from May to August, and lenders are anticipating a positive turnout.
Huntington National Bank offers prime loans for new and used RVs, but the bank tends to underwrite loans for travel trailers more than any other type of recreational vehicle. RV originations are down 5% to 10% compared with the same time last year, and while it’s too soon to tell how RV sales will swing for the year, high consumer confidence and steady interest rates give the bank a positive outlook.
“What I think drives this business is low unemployment rates,” Wirth said. “People feel really good about their future earnings. There are high consumer confidence levels, low inflation rates, and low rates in general. So, the consumer’s feeling good and they’re willing to spend money on these types of products.”
At Texas Dow Employees Credit Union, RV originations have had a “slower start” this year, Jud Chamblee, said wholesale lending business development manager. The credit union financed 196 contracts through April, compared with 274 contracts in the prior-year period. The decline is likely spurred by consumers rushing to buy RVs after several interest rate hikes from the Federal Reserve last year, Chamblee explained.
“It might have pushed some people to buy [RVs] because rates were going up,” Chamblee said. “Some of the folks went out and bought early because of how the rates were going. [Rates] were going up, and now they’ve kind of settled down. The rates are staying flat and as long as they stay that way, I think it’s going to be positive for the market.”
Millennials account for 35% of RV drivers and have been increasing their share for the past few years, said Bank of America Senior Client Manager Jermaine Johnson. “We definitely see this is a thriving industry right now,” Johnson said. “We’ve seen a big change in the RV shows and seeing more young families with kids running around now. It’s a big family environment at a younger age.”
Specifically, Johnson credits the marketing campaigns from OEMs for reaching more millennials on the internet and selling the message of RV buying.
Bank of America’s RV loan portfolio is $2 billion, and the bank’s RV originations are “holding steady” year over year, Johnson said.