Here's a primer on the RV industry

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With the coronavirus ravaging across the United States and the rest of the world, people are becoming more reluctant to go outside. And for those traveling, the coronavirus has frightened people away from traveling by air or by ship. Because of that, cruise companies and airlines are struggling to make ends meet, resulting in massive layoffs and a need for huge stimulus packages.

Travelers today are mostly traveling by road, where they're either alone or with people that they're comfortable traveling with. These people can be friends, family, or even neighbors. And with work from home becoming a new norm, many people are looking to travel more thanks to the flexibility employers are giving them.

All of these are the reason why the RV industry is booming.

The RV Industry

The RV industry is mostly consolidated by three players: Thor Industries (NYSE: THO), Camping World (NYSE: CWH), and Winnebago (NYSE: WGO). And there are smaller players like LCI Industries (NYSE: LCII) and Rev Group (NYSE: REVG). Plus, you have the smaller players that are usually more specialized. These players are the ones that create the custom RVs that celebrities and high net-worth individuals own.

Regarding the types of RVs, there are two types of RVs: Towables and Motorhomes.

Towables

Photo by Benjamin Zanatta on Unsplash

Towables are the cheaper and the most common RVs. They represent nearly 90% of all sales in the RV industry. The reason why many would choose to buy these over the motorhomes is mainly because of cost. Since most people rarely go camping and or stay in a hotel after traveling far, towable RVs have become an option many people preferred. 

Another big benefit of the towables is that it's quite convenient to bring around. If you're ever in a town that you want to explore, you can leave the towable behind and travel normally around town. Those that have a motorhome carry the struggles of driving large vehicles wherever they go. 

Additionally, since towables are easier to manage, they're less of a headache to new RV owners. With less upkeep required, towables are cheaper to buy, cheaper to use, and more convenient than motorhomes. 

Motorhomes

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For those wanting to travel full time, motorhomes are perfect for you. While they are more expensive, they do amount to around 10% of RV sales. With work from home becoming a new norm, people are looking into selling their homes and looking to live in an RV full time. That way, they can travel wherever they want and continue to make the same amount of money wherever they go. 

At the same time, one of the biggest disadvantages of it is that wherever you go, you need to take a big and bulky vehicle with you. It can be difficult to travel with an RV in urban areas. Plus, there are so many things that require upkeeping that it becomes more expensive and stressful to use than a towable. 

The history of how RVs became popular

The RV industry originated in 1910 as the first RV was built. The thinking behind the RV was that it made you feel like you're home, except your home had wheels and you can take it wherever you go. Near the end of the 20th century, while RVs became more ingrained into American culture, they still weren't seen as cool.

Catalysts for the RV Industry

The Rv industry has experienced immense growth since the Great Financial Crisis thanks to these many catalysts.

Baby Boomers

As the baby boomers near their retirement age and even start focusing more on enjoying retirement, traveling has been one thing many baby boomers wanted to do. Since RVs allow them to travel in a more convenient and safer way, many baby boomers have been eager to buy motorhomes. 

The Van Life trend

The Van Life trend was originally a small trend that a few people adopted but many follow it on social media. While it does look great to travel around the world through a van, because many can't work from anywhere back then, many didn't adopt it.

Thanks to the pandemic and the tools available to work from anywhere, the van life trend has ignited once again but this time, it has even more people adopting the lifestyle. With more people wanting to go out into nature and having the flexibility to work from anywhere, people are looking to take a chance at the trend that they've been following for so long.

Interestingly, most people that go for the Van Life aren't looking to buy RVs. Instead, they're looking retrofit transit and cargo vans into their own motorhomes. Not only is it cheaper but it has allowed automakers like Ford and Mercedes to participate in the booming RV industry. 

In general, people want to get out of the house

With the shelter-in-place lasting for several months, many people are yearning to travel outdoors. During the time people have been staying indoors, many have learned of the benefits of going out and spending a lot of time with nature. Since most people live far from national parks and other places where nature is abundant, many are looking to get a towable (or even a motorhome) and travel to places of nature. 

And if you think about it, it's not only old people that want to buy RVs, it's also young people. Because of work from home and the worldwide quarantine, more young people are wanting to buy RVs, making the average age of an RV owner to be younger. That helps the Rv industry expand its customer base.

Altogether, these are the reasons why the RV industry has been booming since the Great Recession and why the RV industry is currently experiencing unprecedented demand. 

The effects of the unprecedented demand

As more and more people buy RVs, there will be a lot more people needing a place to park them. RV parks are starting to experience a lack of supply of parking spaces as more people start traveling with RVs. Not only has it led to an increase in the cost of RV parking spaces but has also prompted governments to open up lands to accommodate more RV owners. 

Also, because manufacturers weren't prepared for the huge demand for RVs, the production quality of many RVs has decreased as factories and workers are being strained to their limits. Because they needed to rush to get more supply onto the market, manufacturers have been cutting corners. Not only has it reduced production times but also production quality as well. Altogether, many horror stories are popping up among RV owners because of this.

In conclusion

While the RV industry is cyclical, currently it's experiencing its best times ever. With a huge shortage of RVs on the market and accelerating demand, many investors and entrepreneurs are enthusiastic about the RV industry. 

As manufacturing in America is said to be declining, the RV industry looks to revitalize American factories. Even if there is a huge need to increase the supply of RVs fast, instead of cutting corners and straining workers and equipment, RV manufacturers are looking to expand their production facilities to improve their production quality and to boost the supply of RVs. 

In the meantime, will you buy an RV, or will you invest in an RV manufacturer?