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A Recessionary Toy Story

The sad part about the financial media is that if there is a story to tell, it’s usually about how everything is awesome. Rarely if ever do they look at how the middle class is doing and the underlying problems within the economic landscape until a crisis is upon the markets and the nation.

The recreational vehicle, motorcycle, and boating industries are no exception as to being bypassed as an indicator of overall economic health.

The data from the RVIA (Recreational Vehicle Industry Association) reported that sales were down overall 10.2% through the end of the third quarter of 2024. The numbers are somewhat diverse as the lower cost RV’s had more success in 2023 and 2024 than the higher priced fifth wheel, motor home, and park model variety as indicated in this chart below:

Meanwhile, in the recreational boating industry it’s not much better. Per the National Marine Manufacturers Association sales were only down about 10 to 13%. But once one starts looking at individual stocks in the industry, the numbers look a lot worse, especially after the $2 million plus price segment is removed from the analysis.

For the sake of this discussion, let’s take a look at a few of the industry leader’s stock performance and what these companies are reporting from their latest earnings reports.

MasterCraft Boat Holdings

The quarterly report was ugly with a decline in boat deliveries of 35.6% but the bigger issue was pontoon boat, the major purchase most middle class buyers engage in were down 51.1% year over year.

Brunswick Corporation

The company does not provide exact unit numbers but the net sales were down 19.4% year over year per the quarterly report ending September 28, 2024. The bigger number indicative of the industry as a whole was that the propulsion division, primarily Mercury Marine, which sells engines to some competitors recorded net sales down 32.3% year over year.

Polaris

Polaris manufactures off road, on road, and watercraft (jet skis) for recreational and some work applications, mostly related to farming and land management. It was not a good report year over year as off road was down 24%, on road down 13%, and marine division down 36 through November 30, 2024.

Winnebago

This is one unique animal which crosses over from the RV industry with their traditional brands and the marine industry since the acquisition of Chris Craft a few years ago. The best tracking metric is dealer inventories which in the RV division is divided into towables which were down 8.7% and motorhomes down 5.4%. Chris Craft dealer inventories dropped 16.6% year over year despite a bump in dealer sales in FY 25’s first quarter ending November 30, 2024.

BRP Industries

BRP Industries, a Canadian corporation, began selling most of their US based marine divisions but elected to keep the SeaDoo brand name. Unfortunately when one looks how bad their last report was on December 6 for the year ending on October 31, 2024, it was not impressive. Year round products were down 20-22% per the report while seasonal products (jet skis and snowmobiles) were down 30-32%.

Harley Davidson

The motorcycle industry has been brutalized with higher interest rates and the venerable stock symbol of HOG is not immune. Sales down 10% in North America and 23% in through September 30, 2024 along with the accompanying 14-16% year over year projected lower revenues does not help.

What these equities demonstrate is a definitive link between an exhausted consumer, higher interest rates, and a lack of wages to keep pace with cost of every day goods thus impacting disposable income for these non-essential recreational items like these manufacturers make.

This truly is an indicator of a recessionary toy story.

(Special thanks to Xi’s Grok for the title picture)

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2 Comments

  1. tom tom 01/20/2025

    Maintenance and insurance costs probably have an effect on this too

    • John Galt John Galt Post author | 01/21/2025

      Insurance on big boy toys is murder now…

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