Conversion shipments dropped 5.1 percent in the first quarter, and the recreational vehicle industry's forecaster is revising his outlook to show a steeper 1997 decline than originally predicted.
Van, pickup and sport-utility conversion vehicles are trending at an annual rate that should bring deliveries in below last year's total, said John DeWolf, an economic forecaster in Sterling, Va., who consults for the Recreational Vehicle Industry Association. Late last year, DeWolf forecast a 5.6 percent decline in 1997 for conversions, following a 5.3 percent decline in 1996.
Outside of conversions, the RV industry will show an overall increase of 2.7 percent this year and a 1.7 percent gain in 1998, DeWolf predicted.
In light of the numbers for the first quarter, DeWolf said he was planning to revise his 1997 forecast to show a greater decline in conversion deliveries. He said he had to review the new forecast with RVIA officials before making it public.
SIGNS OF HOPE
DeWolf cited interest rates as a concern.
The Commerce Department said the economy grew at a robust annual rate of 5.6 percent in the first quarter. 'That makes me think that the Fed will almost certainly raise interest rates' to keep inflation in check, DeWolf said. 'But it wouldn't be a serious blow.'
Converters remain optimistic about 1997, given the strong economy and high levels of consumer confidence. Although interest rates are expected to creep up, no one is sounding the alarm yet.
RVIA, in releasing its first-quarter sales numbers, also cited a rising consumer confidence indicator as signs of 'favorable buying attitudes.' The University of Michigan's Index of Consumer Sentiment is now at its highest level since 1990-91.
The conversion market is 'very similar' to last year's, when deliveries of all types of conversion vehicles declined 2.9 percent to 219,000 units, said Kelly Rose, chairman of Starcraft Corp. in Goshen, Ind. The industry is doing well considering the cold spring weather in the Midwest, he said.
'I'm feeling very optimistic about it,' Rose said.
At Coachmen Industries Inc., a maker of RVs and conversion vehicles in Elkhart, Ind., the company is expecting a 'reasonably good' year, Chairman Tom Corson said.
He is also optimistic about the industry's long-term prospects. Corson notes that the baby-boomer generation is approaching the 50-to-64 age group, which historically has shown the strongest interest in RVs.
Deliveries of all conversion vehicles totaled 53,800 in the first three months of 1997, down 5.1 percent from the first quarter of last year, according to RVIA numbers.
However, manufacturers reported deliveries of 21,200 conversion vehicles in March, a 1.4 percent gain over the same month last year.
MOTOR HOMES OFF 10.3%
Motor homes showed a 10.3 percent decline in the first quarter, RVIA said. In the motor home category, van campers fared worst, with deliveries off 16.7 percent. In March, motor home deliveries skidded 20 percent from year-ago levels.
Rose, who is also chairman of the RVIA board, said he is not worried about the Fed pushing for a steep increase in rates.
Said Rose: 'I think they'll go slow and they'll go gradual, and there won't be basically any effect.'