Citi analysts examined recreational vehicles and boats and found that high prices and elevated financing costs are keeping much of the market under pressure. There's some good news: motorcycles, off-road vehicles, and motorized RVs have become more affordable relative to incomes.
Citi leisure analyst James Hardiman wrote in a note on Monday that investors typically group RVs, boats, motorcycles, and off-road vehicles together in terms of macro factors. But he noted that "these categories face very different affordability backdrops," contrary to investor beliefs.
"Towable RV and boat payments remain well above their historical share of buyer income, and while motorcycle/ORV payments are up meaningfully, this has been outpaced by income growth," Hardiman said, adding, "The relative retail performance of these categories supports the conclusion that affordability, rather than a uniform pullback in discretionary spending, is the biggest factor separating the winners from the losers."
Hardiman estimates that monthly payments on a comparable new towable RV are 67% above 2019 levels, while boat payments have risen 54%.
He said unaffordable towable RVs and high financing costs have forced buyers to trade down. "Buyers have responded by trading down to smaller, less expensive, and lower-content units, but that mix shift has not solved the underlying affordability problem," he wrote.
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