RV PRO

January '20

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24 • RV PRO • January 2020 rv-pro.com I f RV dealers ran their businesses according to the headlines or by the average con- tent of any news program, they might be forgiven for developing a bit of a bunker mentality and battening down the hatches for the worst case. Impeachment, tariffs, imperiled trade deals with Mexico and Canada and, of all things, socialism, can fill everyone with a sense of dread. But according to two leaders of major lenders for floorplan financing in the RV industry, the U.S. economy remains strong and most indicators point to a continuation of that trend. "A lot of the uncertainty we see is around political or trade issues. But when we look at expectations for the economy into 2020, most indicators point to GDP growth in the 2 percent range, which is still good," says Tim Hyland, president of Wells Fargo CDF's RV group. "You see inflation is in check. Interest rates have moderated a little bit. Unemploy- ment is low and that's helping to drive wage growth. "And consumer confidence has held up pretty well," he says. "Since about two-thirds of our economy is driven by the consumer, these and other factors point to an economy that doesn't seem too bad as we look forward into 2020." Jeff Olander, Northpoint Commercial Finance's senior VP of National Accounts, voiced much of the same sentiments. "We really continue to be cautiously opti- mistic about the upcoming year and the RV industry," he says. "Like everyone else, Northpoint is aware of many of the uncertain- ties that exist going in to 2020, but we are choosing to stay on our course and remain committed to the industries we serve." Hyland says Wells Fargo doesn't have any foreseeable plans to change its floor- plan financing for 2020. He adds that he believes dealers have been prudent with their inventories and have taken steps to stay that way. "When we look at some of the portfolio metrics, they've held up reasonably well," he says. "We've still got turns that are over two times and the aging is steadily coming down. As we stepped into the Open House we still saw a little bit of a tail on aged product over a year – each month that is steadily coming down. While you'll find some dealers that need to continue to manage down the amount of aged inventory, I think overall, inventory levels are in much better shape now." Likewise, Olander says that summer sales activity resulted in many dealerships seeing their inventories decline. Meanwhile, model- year floorplan liquidations also have been of benefit this year. "Dealers are the ones that know where they need to be with their inventory levels and are running their businesses carefully," he says. "Dealers are also working closely with their manufacturer partners to have the right mix of new units to display and sell." Olander acknowledges what he calls a "fairly significant increase" in aged prod- ucts on dealer lots over the past 12 to 18 months, but says he doesn't believe it is of great concern yet, especially in light of the late summer sales success. As dealers head into 2020 and its poten- tially game-changing presidential election, Hyland says it is less important to try to predict the economy than it is for dealers to make sure they are running solid, stable businesses. Economies always have ups and downs, and it is vital that businesses take advantage of the good times and be ready to adjust when the economy retracts. However, given that consumer confidence remains high, along with other positive factors, there's no reason to panic over the news crisis of the day just yet, according to Hyland. "As the consumers go, the dealers will follow," he says. "If you look at (the Pennsyl- vania RV & Camping show in) Hershey, dealer sentiment at Open House, (the RVIA 2019 California RV Show in) Fontana, and other shows around the country, we've seen pretty good activity. The consumer has actually held up pretty well. I think dealers will be cautious with their inventory levels, but as we step into 2020, most people are cautiously optimistic. It could be a good year for the RV industry." S PEC I A L S EC T I O N O U T LO O K 2 02 0 Floorplan Lenders Floorplan Lenders Optimistic on 2020 Optimistic on 2020 By Travis O. Pryor Wells Fargo's Tim Hyland says his company doesn't have any foreseeable plans to change its floorplan financing. He adds that he believes dealers have been prudent with their inventories. Northpoint's Jeff Olander says his company is cautiously optimistic about the RV industry's prospects in the new year. "Like everyone else, Northpoint is aware of many of the uncertainties that exist going in to 2020, but we are choosing to stay on our course and remain committed to the industries we serve," he says.

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