Where is the RV Market Headed? 5 Trends for Lenders to Keep an Eye on in 2023
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 2021, the RV market was valued at close to $34 billion—and this number is projected to grow over the next 5-10 years. This blog post will dive into the key factors lenders should consider when operating in the American RV market, including economic trends, demographic shifts, industry risks, and technological advancements. By understanding these critical elements, financial institutions can position themselves for better success.
Economic Climate & Consumer Confidence
To start, it is important for banks and credit unions to keep a close eye on the ever-changing economic climate, as it plays a vital role in a consumer’s willingness to make a big purchase like an RV. And, let’s go ahead and address the elephant in the room: The current economic climate we find ourselves in March of 2023 is a challenging one, as fears of a recession factor into the minds of many Americans.
However, a recent report from Mordor Intelligence predicts the RV market size will reach $59.16 billion in value by 2027, signaling confidence in an industry that is beginning to attract a promising number of first-time buyers. The report attributes the predicted growth to the rising number of RVs being used for commercial purposes, a rising number of active campers looking for RVs, and even higher demand for rentals.
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 millennial customer base is beginning to take over the industry. This shift can be attributed to several factors, such as the increasing popularity of remote work, the desire for flexible living arrangements, and an emphasis on outdoor experiences and domestic travel.
Looking to unlock a travel-centric lifestyle, the younger consumer base is creating a noticeable RV sales trend. Will this trend continue into the future? With a growing desire among younger Americans to spend more time outside and adventure to the far corners of the country, it’s worth keeping an eye on.
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.
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.
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.