RV dealers looking towards a brighter future

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RV dealers looking towards a brighter future

seekingalpha09-22

Plagued by high interest rates, bulging dealer lots, production cuts, and elevated promotional pricing, the RV industry faced its toughest 24 months in a decade. After limping through the first half ...

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After limping through the first half ...</p>\n\n<a href=\"https://seekingalpha.com/news/4151736-rv-dealers-looking-towards-a-brighter-future\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"CWH","symbol_name":"露营世界","start_time":0,"source_url":"https://seekingalpha.com/news/4151736-rv-dealers-looking-towards-a-brighter-future","article_id":"2469035699","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/172283788/image_172283788.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2469035699","pubTimestamp":1727019867,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"Plagued by high interest rates, bulging dealer lots, production cuts, and elevated promotional pricing, the RV industry faced its toughest 24 months in a decade. 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While existing challenges from a potential recession and the upcoming election will undermine discretionary spending on big ticket items, the outlook for the market seems to be stabilizing and more “broadly investable for the first time in two years,” says Truist analyst Michael Swartz. On the front lines are RV dealers. Inventory conditions exacerbated by sluggish demand prompted significant price cuts with Lazydays Holdings (NASDAQ:GORV) slashing sticker prices by as much as half on their 2022 and 2023 models to compensate for lower-priced 2024 models. On the company’s most recent earnings call, CEO John North said they will focus on the things they can control, specifically, maintaining a healthy vehicle inventory. “Dealer inventory levels will be a key monitoring point for the industry,” agrees Seeking Alpha investor Dan Victor.  Fortunately, of the dealers surveyed by Truist, only 13% of respondents said inventory levels were too heavy relative to demand while 38% said inventory levels were too light. Outside of the pandemic-era inventory shortages, this is the largest “too light” reading since late 2017, and this mostly pertains to motorized product which only represents 11%-12% of demand. On the demand side, the Fed’s 50 basis point rate cut coupled with recent promotions presents a more attractive buying opportunity for consumers. With 80% of big-ticket items like RVs financed, “even a small cut in interest rates can have a big impact on the total financing costs,” Seeking Alpha investor Daniel Jones said, adding that a 0.5% cut in the financing rate from 6% to 5.5% on a $100,000 purchase with a 10-year term, will result in savings of nearly $3K over the life of the payment. That more than doubles for a 20-year term, and at 30-years, the savings balloons to $11,433. “Add on top of this the opportunity for consumers to allocate the monthly cost savings resulting from the lower payments into things like stocks, and you are talking some real money for the average person,” Jones adds. For dealers like Lazydays (GORV) and Camping World (NYSE:CWH), the normalized inventory environment coupled with less promotional pricing and lower carrying costs translates into increased profit margins. “We believe dealer margins have likely reached their nadir given the combination of a healthier inventory backdrop, stable pricing, normalized discounting, and the Fed’s recent rate cut,” says Swartz.  With higher profits comes capital for expansion, and to capitalize on the more favorable environment, Camping World (CWH) has been engaged in an expansion campaign that grew its market share from 15-18% to 25% by the end of Q1. With acquisitions more attractive, the company plans to continue its reach with a target of 7 new locations per quarter. “We’re going to enjoy the fruits of our labor from all of these acquisitions,” Camping World CEO Marcus Lemonis said on the company’s recent earnings call, adding that with lower rates consumers will embrace the RV lifestyle. “Customers love the lifestyle. So, I have to believe that as rates come back down, they’re going to love the lifestyle even more. And the affordability bans are going to widen because it’s simply a monthly payment gain. Lower rates, lower monthly payments, the funnel’s wider.”","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"hasMoreComments":false,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false}}