Tariff Tracker: RV Industry Faces a Steel and Aluminum Fork in the Road

While many industries are scrambling to adapt to the steel and aluminum tariffs imposed by Trump administration, the recreational vehicle industry is of particular note. Sales have been booming in recent years, reaching historic levels. However, the materials that make RVs -aluminum and steel - are facing price increases, forcing manufacturers like Thor Industries and Winnebago to make adjustments.

Recreational vehicle shipments in the US have grown year over year since 2009, following the collapse of the market during the recession. The Recreational Vehicle Industry Association (RVIA) puts out monthly reports on RV shipments. Per RVIA, shipments topped 500,000 units in 2017, growing over 17% from 2016.

In 2018, shipments through April looked strong as well, showing growth on comparable months in 2017. However, the most recent 2018 data shows shipments are down in May and June; in June, shipments were down over 11% from the same month last year.

Is this a sign of an industry feeling the effects of tariffs? Are dealers decreasing orders in anticipation of future sales declines? Could this just be a correction in a booming industry?

While we don’t know which of these questions is the right one to be asking at this time, the industry is undoubtedly under a bit of stress.

Early Warning Signs

At the beginning of June, the CEO of Thor Industries – the largest manufacturer of RVs in the US – warned about the effects of the tariffs. In a press release, he stated, “While labor costs have moderated, we are experiencing inflationary price increases in certain raw material and commodity-based components due in large part to the headwinds created by the announcement and implementation of the steel and aluminum tariffs and other regulatory actions, as well as higher warranty costs.” At the time, he believed that the company would be able to “offset these cost increases.”

Aluminum and steel prices had already increased substantially by the time the tariffs went into effect in early June, preempting the actual tariffs. While it appears pricing for aluminum and steel has stabilized a bit recently, some manufacturers are being forced to pass the increased costs of materials on to consumers.

Price Increases & Looking Ahead to the Future of the RV Market

Recently, Winnebago was reported to be taking measures to meet the rising costs of production. The company is trying to adjust the way they manufacture their products to reduce expenditures, but is also raising prices on their RVs.

While top RV manufacturers will continue to look for ways to modify their production methods to absorb some of these costs, price increases are inevitable for many manufacturers, particularly smaller players.

The coming months will start to spell out the true effects of these tariffs on the RV market and other major industries. In the meantime, consumers may be more likely to turn to the used RV marketplace or seek out rental opportunities to fulfill their needs at lower price points.

To Learn More

Want to learn more about tariffs and the industries they'll impact the most? Download the Freedonia Group's new white paper for the latest insights from experts.

About the Author

Dan Debelius is an industry analyst at the Freedonia Group, where he writes industry studies on the US consumer and commercial goods market.