Where is the RV Market Headed? 5 Trends for Lenders to Keep an Eye on in 2024

By: Web Finance Direct

The North American RV market is constantly evolving. Driven by changing consumer preferences, a shift towards remote work, and a renewed interest in domestic travel, the recreational vehicle industry presents banks and credit unions with a unique opportunity for lending. As of 2024, the North American Recreational Vehicle Market is estimated at $19.83 billion. The North American RV market is the fastest-expanding global market for recreational vehicles and is expected to rise at a compounded annual growth rate of 7.99% in the next five years, reaching $29.11 billion by 2029.

Keep reading for a more thorough look at the RV industry outlook for 2024 and some of the key factors lenders within the North American RV market should be aware of, including economic trends, demographic shifts, supply chain and other industry considerations, and how emerging mobile technologies are affecting the RV market. By understanding these critical elements, financial institutions can position themselves for better success.

Economic Climate & Consumer Confidence

Looking back, the RV industry saw record-breaking sales during the pandemic, driven by the urge for safer travel and greater interest in outdoor activities. However, a recent report from Mordor Intelligence regarding the current economic state across the RV sector suggests a slowdown in sales. Experts are forecasting a downturn in RV sales and a shift toward a buyer’s market.

There are several significant impacts on RV market trends and financing options due to the current economic climate. Interest rate increases by the Federal Reserve to counter inflation are driving up RV financing costs. Higher monthly payments and more restrictive qualification criteria are lowering consumer demand. While inflation numbers are showing some slight improvement, potential recession fears and overall economic uncertainty have damaged consumer confidence, making people cautious about significant purchases like RVs.

Looking ahead, we’re seeing more and more active campers contributing to RV demand. Commercial use of RVs is picking up, and we’re expecting growth in peer-to-peer rental services to pull in Millennial and Gen Z consumers, who are showing a growing preference for renting over owning.

In recent years, it’s become much more straightforward to rent a new RV. Every year brings fresh models and technologies to the market, giving RV consumers a wide array of choices. Lenders should think more about appealing to businesses and individuals who are buying recreational vehicles with the intent of making them available for rent.

The interplay between our economic climate and consumer confidence is essential for lenders looking to succeed in the RV market. For auto and RV lenders, the ability to adapt to changing conditions will be key in the years ahead.

Demographic Switches in RV Purchasing

Another top RV market trend in the recreational vehicle industry is a shift in end-user demographics. Historically, the RV market was dominated by those reaching the age of retirement. Recreational vehicles gave them a way to enjoy retirement by traveling the country.

Today, however, the growing Millennial and Gen Z customer base is becoming the primary consumer market. This shift can be attributed to several factors, such as the aging of these important demographics, the increasing popularity of remote work, the desire for more flexible living arrangements, and an emphasis on outdoor experiences and domestic travel.

Looking to unlock a travel-centric lifestyle, this growing consumer base is creating a noticeable RV sales trend. Will this trend continue into the future? It’s difficult to predict with certainty. The oldest Millennials are now in their early 40s, while the oldest Gen Z consumers are in their late 20s. These groups have traditionally expressed a greater desire to spend more time outside and adventure to the far corners of the country, but many are reaching an age where home ownership is becoming more of a priority.

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How People Are Financing RVs

Traditionally, those who finance their RVs would start at their local bank, securing a loan in person and then heading to the dealership. This, like the demographics of buyers, is also going through a radical shift. Indirect lending is becoming more popular with dealerships, giving them the ability to offer their customers a range of financing options after they select an RV they would like to purchase.

If you’re looking to find new members and offer more RV loans, indirect lending may be the right solution. Web Finance Direct specializes in indirect lending. By joining as a lender, you’ll get access to our diverse dealership network, helping to connect you with qualified applicants. By carefully examining each applicant, we’ll help ensure that each application your bank or credit union receives meets your standards.

Our proven process is designed to be risk-free, giving you the ability to establish your lending footprint in the RV industry over time. Want to learn more? Reach out to talk to an expert today.

RV Industry Tech Innovations 

Technology will inevitably play a bigger role in the RV industry. As it evolves, manufacturers are continually incorporating cutting-edge software and features into their products, enhancing the overall experience for RV market consumers. For lenders looking to enter the RV financing space, staying informed about these technological advancements is essential, as they can impact both the industry’s growth and the potential financing needs of borrowers.

Take Winnebago, for example. The brand recently announced a prototype for an all-new, all-electric RV, the eRV2. This is a major selling point for many of the younger buyers. With convenience and sustainability in mind, advancements in tech will surely be a major RV market trend for the foreseeable future. Higher tech options like all-electric RVs may come with higher price tags, leading to an increased demand for financing. 

Where RVs Are Being Purchased

Finally, before entering the industry, banks and credit unions should keep an eye on which states or regions are producing the best sales volume for RVs. According to TitleMax, the West and Midwest are currently the top two regions. Alaska and Oregon are on top in terms of estimated per capita spending on RVs and servicing. Also in the top 10 are Minnesota, South Dakota, Iowa, and Wyoming.

In conclusion, the RV market presents banks and credit unions with a promising opportunity for growth. Keeping an eye on trends such as technological advancements and the potential of indirect lending is important for lenders looking to position themselves for success. Visit our website to learn more and be sure to check out our blog to read more about the top trends in the financing world.

RV Market FAQs

What are the benefits of offering RV loans to dealerships?

Through indirect lending with Web Finance Direct, you’ll access more qualified RV loan applicants and help dealerships be more competitive in today’s marketplace.

How does the current economic climate impact RV sales and financing options?

Living expenses are climbing, forcing some to prioritize essentials over discretionary buys like an RV. Supply chain issues that initially led to a seller’s market for RVs have been resolved to some extent, resulting in greater inventory and more buying — and bargaining — power for today’s consumers. Interest rates on recreation vehicle loans are likely to rise in line with the broader financial market, driven by Federal Reserve hikes. Lenders may wish to offer extended loan terms to lessen monthly payments.

What factors should lenders consider when determining RV loan rates?

Lenders have to consider a lot of factors when determining their loan rates. First, it is important to analyze the current economic climate, ensuring that you are offering the best possible rates. You should also factor in an applicant’s income and credit score. 

What geographical trends should my institution consider when targeting RV lending opportunities?

Areas with milder winters and long camping seasons tend to have higher RV ownership rates and potentially greater demand for RV loan lenders. Similarly, locations with robust tourism industries often attract RV enthusiasts, presenting the potential for both rental and purchase financing opportunities. On the downside, areas with a high cost of living may see less demand for RVs due to competing financial priorities and potentially smaller disposable incomes, combined with limited RV storage options, which may deter potential buyers.

How can lenders differentiate themselves from competitors in the RV lending market?

Offering tailored financing solutions for all-electric or hybrid RVs, or offering loans that cover the cost of adding advanced features to existing models, could help lenders differentiate themselves in the market and cater to a wider range of customers.

How can lenders ensure that dealerships and their customers understand the terms and conditions of RV loans?

Lenders can partner with an F&I partner like Web Finance Direct. We handle all administrative and closing tasks, giving you more time to connect with qualified applicants.