"Right now, it’s brutal—it’s a bloodbath," says Morningstar analyst David Whiston. "In January, sales were down 79 percent, compared to January 2008."
Despite being among the the most inexpensive way for Americans to vacation, the typical pricetag of $40,000 for an RV prompted many people to steer clear of buying a new one.
"People aren't giving their RVs up right now, but they're not upgrading," says Mark Polk, owner of RV Education 101, an education program that publishes how-to books and videos for newcomers to the RV lifestyle.
"A lot of people lost a substantial part of their funds," Polk adds. "Shipments have dropped significantly, a lot of people are waiting to see what will happen. This is going to continue to influence trends."
Still, as the recession nears a bottom, many believe RVs may be ready to turn the corner.
"The RV industry serves as a bit of a microcosm of the housing market," says Craig Kennison, an analyst at Robert W. Baird. "The recession affected the RV industry first, so we’d like to believe that we’ll see it turn before the rest of the economy."
The $37 billion industry took off in the 1960s, as millions of Americans purchased RVs to realize their American Dream and travel around the nation. The fascination stuck, growing with each passing decade.
There are now about 8.2 million RV owners across the nation, according to the Recreation Vehicle Industry Association. Unlike the stereotype of older couples hitting the road after retirement, the average RV owner is middle-aged and married, traveling a total of 4,500 miles and 26 days annually.
Right now, the biggest roadblock to a recovery has been consumers’ inability to secure credit to buy an RV.
"The single biggest issue for the industry is financing," said Winnebago CEO Bob Olson. "People just can’t get financing from major lending institutions. This is affecting retail and wholesale customers."
With credit tight, there has been less need for inventory at RV dealerships. At the end of last year, wholesale shipments had fallen by 75 percent, according to a research note from Baird.
Such drastic cuts have severely impacted many manufacturers. RV makers Fleetwood, Country Coach and Monaco Club recently sought Chapter 11 bankruptcy protection.
As smaller companies go under, they leave room for larger, more stable companies to take over the industry.
"Thor and Winnebago will be among the survivors. It’s a matter of having a sound balance sheet," Kennison said. "They will gain a significant amount of market share as other companies exit the market. At the end of this, there will be a considerably significant advantage for Winnebago and Thor."
This potential is not lost on the RV companies.
"We have a good foundation to weather this storm," Olson said. "We have no debt and an excellent management team. The economy will turn and we are well poised to take advantage of it."
Thor did not return phone calls seeking comment.
Investors have taken notice as well, believing that the crunch in the industry will benefit larger companies. They are taking interest in the likely survivors, said Kennison.
However, valuation of the stocks is difficult to discern, since RV companies aren't making money in the current economic environment. Kennison's firm has come to terms with this issue by estimating free cash flow for future years and discounting it by the cost of capital. He currently rates both Winnebago and Thor stocks as neutral.