Could record RV production and spiking fuel prices create a bubble ready to burst?
Rising fuel and borrowing costs could keep Canadians off the open road this summer
The North American RV industry produced 600,000 campers and trailers in 2021 — an all-time record — fuelled in part by the pandemic that had people craving wide open spaces amid few vacation options.
But with COVID-19-related restrictions in the rear view mirror, gas prices through the roof and borrowing costs higher than they've been in years, long haul RV trips may suddenly be lower on the priority list.
"This year, they're quite scaled back and mainly because of the cost," says Gail Aller-Stead who has been RVing for seven years. "We're thinking twice about taking trips. It's not stopping us, but we're definitely thinking twice about what we're going to do."
She and her husband have travelled all over Canada to every province except Newfoundland and Labrador and all over the U.S., driving as much as 50,000 kilometres in the last seven years.
"It's absolutely fabulous," she said.
When they started figuring out this summer's travel plan, they realized the costs just weren't the same as what they had been in recent years and they decided to cut back.
"When we started doing the numbers, figuring out how much it would cost, we realized we'd better stay closer to home this year, save up and do our bigger trip next year."
With the increasing expense of buying, fuelling and then all of the miscellaneous costs, it has many dedicated RVers like Aller-Stead wondering whether those who bought in when pandemic demand was high will regret their decisions.
"People paid high for that, for getting into the area and now what they're realizing with increased demand for parts and access to RV sites, people can't do that. So what I think we're going to see — especially with the new people and the newcomers coming into it in the last couple of years — I think they're going to want to bail out."
The cost of filling Aller-Stead's 40-foot diesel bus has more than doubled in the last year, so the matrix now involves potentially driving and paying for a hotel room, which could cost less in certain situations.
40 years of long-term growth
The RV industry has seen 40 years of long-term growth, which the pandemic has supercharged, according to Monika Geraci, spokesperson for the RV Industry Association, which represents the $140-billion RV industry in North America.
In 2021, over 600,000 RVs were produced in North America. To put that into context, the previous high was 506,000 in 2017, which is a 20 per cent increase in production.
Sales lots have been "pretty thin" over the last 18 moths, Geraci says, but there is currently record production and there should be more RVs headed to local dealerships.
Jeff Redmond, co-owner of Bucars RV Centre in Calgary, says he hasn't seen a drop in sales just yet.
And following steady growth in sales over the last few years, he says he could have sold more vehicles this season if supply chains were able to meet demand.
One of the strongest areas of growth has been in the smaller types of vehicles as people become more fuel conscious and manufacturers try to build with lighter, more economical materials that area easier to tow.
"Certainly van life has really taken over. I think with the freedom and flexibility, you can really do anything. It could be a transporter around town and you can park in parking lot," Redmond said.
As the world shifts to more varying types of travel, RBC economist Claire Fan says Canadians are travelling more and may consider options outside of RVing.
"A lot of these RVs are quite expensive," said RBC economist Claire Fan.
"And most people would require some sort of financing to support these purchases. And as borrowing costs start to rise, with interest rates increasing, it is getting more difficult to finance these purchases at the get go."
Fan says Canadians continue to spend heavily on long-haul trips on planes that weren't accessible during the pandemic. What was once considered "discretionary spending" on travel has become essential to many consumers, Fan says.
"Everyone's dying to hop on the airplane to travel somewhere," she said.
"But how long does that last is really the key question I think we're trying to answer here. How long before consumers really feel the pinch of rising inflation."
The question for many watching the RV industry is whether that might affect the prices of RVs in the long run, maybe even create a drop in demand.
For Aller-Stead, she says they are staying closer to home this year, deciding to put off the more than $3,000 it would cost to drive from Ontario to Western Canada until next year.
With files from Erin Collins
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