Fleetwood says market for RVs is in slump

LOUISVILLE, KY. —  The chief executive of Fleetwood Enterprises Inc. said the current slowdown in the recreational vehicle market was one of the worst he had experienced in his nearly four decades in the business.

“If you look at the numbers, it’s the second- or third-worst year in the history of the industry,” Elden Smith, Fleetwood’s president and CEO, said at an RV trade show in Kentucky.

But he said the market was nowhere near as soft as it was in the late 1970s and early 1980s, when interest rates neared 20%, gasoline prices spiked and RV sales fell 70%.

“That was a real downturn,” Smith said.

Fleetwood is a leading producer of recreational vehicles and manufactured homes.

Like other makers of recreational vehicles, including Polaris Industries Inc., Fleetwood, which is the largest manufacturer of so-called Class A motor homes, has seen its sales slump in recent quarters as interest rates and gasoline prices have risen and consumer confidence has waned.

The Riverside-based company said this month that its fiscal second-quarter revenue fell 16% to about $528 million as sales of recreational vehicles fell to about $365 million from $393 million a year earlier.

According to an industry data tracker, sales of Class A coaches -- the biggest and most profitable the industry makes and in recent years one of its fastest-growing markets -- have been especially hard hit this year.

Industry sales of gas-powered Class A coaches have fallen 20% from January to September, according to Statistical Surveys Inc., and Class A diesel sales are down 12%.

Sales of towable travel trailers and folding campers are down a more moderate 1% for that period. Numbers for last year’s period are inflated by sales to relief agencies and others responding to the back-to-back hurricanes that pummeled the Gulf Coast in 2005.

The Recreation Vehicle Industry Assn., the leading trade group, expects Fleetwood and its rivals to ship 341,900 motor homes and trailers in 2007, down 11.3% from the 385,500 they expect to ship this year and the 384,000 they shipped in 2005.

Higher energy prices are discouraging consumers from buying RVs, which often get fewer than 10 miles per gallon. Smith said the sales slowdown had “resulted in fairly excessive discounting” on dealer lots.

Shares of Fleetwood, which is a big player in the Class A and travel trailer markets, have fallen more than 37% over the last year. On Wednesday, they rose 17 cents to $7.60.

Smith said the market would eventually improve. But he said Fleetwood, which also makes manufactured homes, was reaching out to builders and developers to increase its market share in modular housing.

“The best way to sell modular is getting in with the builders and developers, the people who have the political clout in their local community, and finding out what sells in their area and what their specialty is,” Smith said.

The company will release full fiscal second-quarter results Dec. 7.