free webpage hit counter

RV industry feels ‘relatively quick impact’ of higher gas prices: analyst

Despite record sales in 2021, the RV industry faces some roadblocks. Shares of major industrial companies — Camping World Holdings ( CWH ), Thor Industries ( THO ), and Winnebago Industries ( WGO ) — fell as inflation and gasoline prices soared. And according to the RV Industry Association’s May 2022 Market Report, total vehicle shipments this year are expected to decline 8.4% compared to 2021.

“It’s a compounding effect of inflation for gas, or milk, or heating, or rent,” Brett Jordan, Jefferies managing director, told Yahoo Finance Live (video above). “It all kind of drains the customer’s liquidity. And, obviously, if you’re putting $100 into your tank when you’re at the pump and it’s $25 or $30, that really hits home.”

Jordan discussed industry volatility, the futures market, and pointed out that RV stocks are “dead money” as data points in the automotive and RV industry point to a recession in 2023 and six months later.

“They are [RV stocks] They are trading at optically low valuations, meaning five-plus times earnings for the current year seem extraordinarily cheap. But current year earnings are, in Winnebago’s case, four times what they were in 2019,” Jordan said. “So they are arguably earning more. And until people make a decision about how big the decline is and what the normal rate of return is, it looks like a bit of dead money.

He points out that a recent AAA survey showed that expected travel volume for the rest of 2022 is at a 40-year low. Only 36% of survey respondents believe they will take a vacation in the next six months (compared to 40% in the summer of 2019, when the average gas price was $2.76 per gallon.)

Although COVID fueled a surge in RV popularity and increased sales and marketing revenue, the pandemic brought new customers interested in relatively low-cost models, mainly in the United States. “You’re definitely going to see a migration to lower-priced trailers. A lot of that is likely to be driven by new entrants into the RV space,” Jordan explained. “So people testing the waters are coming to the lower-priced stuff.”

Poor investor confidence could be fueled by companies exploring electric powertrain systems in RVs, Jordan added. Both Thor and Winnebago are looking at ways to electrify their products. Thor is experimenting with regenerative power systems and working on Winnebago electric motor homes. However, current RV technology still faces the problem of not generating enough power to support long-distance driving, “These vehicles are relatively large, not particularly aerodynamic,” Jordan said of the future of electric RVs.

Rebecca Chen is a writer and reporter at Yahoo Finance. Follow her on Twitter @rebeccachen p

Click here for the latest trending stock tickers from the Yahoo Finance platform

Click here for the latest stock market news and in-depth analysis, including events that move stocks

Read the latest financial and business news from Yahoo Finance

Download the Yahoo Finance app Apple Or Android

Follow Yahoo Finance Twitter, Facebook, Instagram, Flipboard, LinkedInAnd YouTube

Leave a Reply

Your email address will not be published.

Previous post Local artist selected to design the next downtown mural | News, Sport, Work
Next post Economists see signs that drivers are reaching the threshold of price pain