As the Doors wrote so eloquently in 1967, “This is the end, beautiful friend, this is the end.”
We have reached the end of 2021. Before the holidays are upon us and we all reach for the noisemakers and horns on New Year’s Eve, I encourage everyone to give a click here to go to our digital magazine library and access the December magazine, or click on the front cover on the left to go straight to the publication.
We have great content in this last issue of 2021, including a review of the RVDA Convention/Expo, a glance ahead at future aftermarket distributor shows and awesome features on Trim-Lok, MTI Industries and legendary dealership Pikes Peak Traveland, plus a ton of new, never-seen-before aftermarket products to ring in 2022.
Publisher Prognostications?
In an industry letter launching our November 2020 digital edition more than a year ago, our publisher, Dana Nelsen, took a swing at predicting what would happen for the industry in 2021.
He got it wrong. Very, very wrong. That said, his prediction was closer than nearly everyone else in the RV industry.
“Based on what I have heard, my prediction, as well as many others’ predictions, are that vehicle sales in 2021 will likely increase 15 to 20 percent* over 2020’s numbers,” he wrote. “Yep, you read that right, but there is an asterisk on that prediction. The asterisk is defined by just one thing: Can OE suppliers get the supply chain functioning properly? If they do the consequences will be enormous.”
Dana might have saved himself with the asterisk because clearly, suppliers and manufacturers were able to produce despite incredible challenges. The final tally for 2021 shipments are projected to end up nearly 40% over 2020 numbers, and retail registrations through September were up 10.6% over the same first nine months of 2020. They have already nearly surpassed the industry’s all-time annual record.
Obviously, 2021 was an incredible, historic year. What does our crystal ball see coming in 2022?
I know consumer demand is powerful and should not be underestimated. manufacturer backlogs are enormous and dealer inventory is thin. I’ll leave predicting the future to our publisher, however.
Dana is now predicting next year will be very similar to 2021 but that a moderate transition will begin to take place late in the year. In late Q3 of 2022, right around the Elkhart Extravaganza, he said the industry will likely have over-corrected and overproduced when it comes to new unit inventory, despite the record sales that will likely take place during the first three quarters. He believes some dealers will head into Q4 2022 slightly overstocked.
He said the aftermarket however will likely be under-supplied, especially when it comes to repair parts. As distributor shows take place, he thinks retail stores and repair shops will be too conservative at the shows and will not place sufficient orders in Q1, causing unnecessary headaches for businesses throughout 2022. He recommends consumer facing aftermarket businesses focus less on ordering at a discount and instead carefully consider what suppliers can produce and which distributors will have inventory available. He said, “Order big. Parts/accessories shortages could potentially be crippling.”
He advices dealers to get aggressive with marketing and sales promotions in Q1 and Q2 of 2022 on new units to leave competition overstocked on vehicle inventory as September/October rolls around. He believes new unit vehicle profit margins seen in 2021 will likely taper off next year and a mild “fire sale” may take place late in 2022 when the industry sees substantial changes to new 2023 vehicles in September. Dealers could end up with too many 2022 units as 2023 vehicles begin shipping. To email Dana, and tell him how wrong or right he will be about next year, click here.
Booming Again
All year, conversations we had with dealers, manufacturers and suppliers invariably included a phrase like this: “We could build/ship/sell so much more now if we just had more RVs.”
Yesterday, Rev Group discussed its fiscal fourth quarter and said 75% to 90% of its RVs were having to go down the line more than once because the manufacturer did not have all the parts necessary on the first go down the manufacturing line.
Yet, Rev Group increased shipments in the fourth quarter from the third quarter, despite the additional time needed to make at least THREE-QUARTERS of its RVs!
There is caution throughout the industry about the fall-off cliff for consumer demand. Nearly everyone expects the falloff to come, but no one seems to know when. The caution has lowered 2022 projections and expectations. I’m here to say those who are cautious will get it wrong.
If suppliers and manufacturers can make 40% more RVs this year, despite all the difficulties accessing parts, despite running RVs down lines multiple times, despite pandemic-related worker outages and difficulties hiring new staff, what could 2022 look like if even some of those challenges eased?
Dealers are ready and waiting. If manufacturers boosted shipments 10% next year, rather than 2%, more than 660,000 RVs would make their way to dealer lots. Dealers who have said for 15 months they could sell anything on their lot would salivate at the notion they could build back enough inventory to boost their sales closer to where they believe they could be.
The notion that 2021 is the peak, from everyone I’ve talked to, is overblown. Next year will be stronger still.
Take Advantage
If 2022 will be an even stronger year in shipments and retail registrations than 2021, get your house in order now to take advantage of all the opportunities to come. A TV ad today about cryptocurrency reminds the audience that fortune favors the brave. In our industry, you don’t have to be brave, simply opportunistic.
Consider your plans and actions heading into 2021. Are you fully stocking up on vehicles, repair parts and aftermarket accessories? Or are you hedging your bets early and will have to scramble as the year goes along?
Are you planning facility investments, equipment and staffing? Or will you dip into reserves to later reactively ramp up operations, then desperate to secure available lots or buildings?
Do not make the same mistakes preparing for the start of 2022 as many may have preparing for 2021. Be opportunistic. Even the most cautious forecasts call for some growth next year. Be sure you are prepared to make the most of your chances.
Here’s to another great year ahead!
Sincerely,
Chris Freeman
