GE Capital: Recreational Industries Trending Positive
GE Capital’s Commercial Distribution Finance (CDF) business said it sees positive trends in the Canadian motorsports and recreational vehicle (RV) industries through the first half of the year, while the marine industry is experiencing a slight slowdown after last year’s accelerated growth.
“Weather once again has had an impact on the recreational industries in Canada, but the RV and motorsports industries are experiencing healthy growth,” said Howard Shiebler, president of CDF in Canada. “We are seeing marine dealers proactively adjusting their ordering patterns to maintain a healthy level of inventory.”
After a 17% increase in wholesale volume financed by CDF in 2013, many dealers decreased their orders of new inventory during the first half of the year to focus on sound inventory management. Regionally, the Western provinces of British Columbia and Alberta continued with robust ordering, while orders in the Prairies, Ontario and Quebec declined.
“Dealers ordered a lot of product last year, and the long winter this year has shortened the selling season fairly significantly,” Shiebler noted. “Dealers are being prudent by focusing on selling their current inventory in order to keep their businesses healthy.”
Although aging has increased slightly to 18%, it is still within the acceptable level that is considered healthy. “We consider aged inventory under 20% healthy, so we work closely with our customers to help them maintain the right balance of inventory,” said Shiebler.
All regions showed strong growth, contributing to a 13%t rise in wholesale volume financed by CDF through June. Growth is attributed to a longer winter selling season, where many dealers sold through their snowmobile inventory. The increase in ordering was strongest in Alberta and the Atlantic regions, which are up 23% and 18% respectively. The national level of aged inventory has decreased to 10%, from last year’s already strong 13%.
“The cold winter had a positive impact on snowmobiles, and this should carry into next year’s ordering,” Shiebler said. “Although we have a shorter summer, liquidations are just slightly below last year’s levels. Because of this, we feel the industry will remain vibrant through the end of the year.”
A revitalized customer base continues to benefit the RV industry, which is evident in a double-digit increase in wholesale volume financed by CDF through the first half of the year. Ontario and the Atlantic provinces helped drive the 13 percent increase nationally, while Quebec’s slower growth is in concert with the province’s marginal GDP growth.
The aging rate has stayed flat at 16%, with the highest rates in Quebec and in the Maritimes.
“The RV industry is solid in Canada, and dealers have done an excellent job of managing their inventory,” said Shiebler. “With RV demand higher than we have seen since before the downturn, we expect this positive trend to continue through the rest of the year.”