With travel season, pain at the pump could add to Winnebago s woes
by Admin |
Now, a surge in fuel prices has them tightening their budget while limiting their road plans as summer driving season arrives. “We’re not traveling to the East Coast anymore,” said Jenise, adding that the price of “fuel has definitely played a role in that.”
Pain at the pump has also compounded the woes of recreational vehicle companies whose share prices have crumbled this year.
Winnebago Industries (WGO.N), the leading RV manufacturer and one barometer for U.S. consumer discretionary spending, has boasted sales above its 20-year average for four straight quarters. Still, its shares have lost more than a third of their value this year in the face of rising inventories, tariff concerns and an unusually long winter.
Shipments to dealers in the sector surged in late 2017, according to Recreational Vehicle Industry Association data. Seth Woolf, analyst for Northcoast Research in Cleveland, wrote that this could lead to a decrease in wholesale shipments in 2018 which in turn could squeeze margins industry-wide at a time when gasoline prices are at their highest in four years.
The American Automobile Association expects gasoline prices to average $3 a gallon this summer. [L2N1SM27U] The U.S. Energy Information Administration has projected a 13.7 percent increase at the pump since last summer. The EIA expects diesel, which powers many of the largest RVs, to be 12.7 percent costlier this summer.
This could discourage RV owners from roaming and also could scare off prospective buyers.
Winnebago’s motor home retail prices range from just over $20,000 for compact towable models to more than half a million dollars for semi truck-sized class A mobile mansions like the Harper’s, according to the company’s website.
In contrast, the S&P 600 Consumer Discretionary index .SPSMCD has advanced 3.6 percent.
A Winnebago representative declined to comment for this article. Neither Thor Industries nor Camping World responded to requests for comment.
AAA expects 42 million Americans to travel this Memorial Day weekend, the most in more than a dozen years. Conference Board consumer confidence data in April showed more consumers were planning a road vacation over the next six months than at the same time last year.
This data does not factor in those who already own and are living in their RVs full time, often on a fixed income. The number of these gypsy types is all but impossible to nail down.
“We’ve heard anecdotally that the number of full-timers – both retirees, and people able to work from the road – have been growing,” said Kevin Broom, Director of Public Relations for the Recreational Vehicle Industry Association.