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Gas price increases worry RV industry

– Volatile gasoline prices could hamper the recreational vehicle industry’s attempts to recover from a deep downturn caused by the recession because sales of the big-ticket items are so dependent on consumer confidence, industry executives and analysts say.

“High fuel prices and rapid fluctuation of fuel prices are not good for consumer confidence,” said Mark Bowersox, Recreation Vehicle Indiana Council executive director. “When you see fuel go up 10 or 15 cents a week or 50 cents in six weeks, that’s a concern.”

At the pump, gas prices averaged $3.54 on Friday, according to AAA. That’s up nearly 41 cents in a month and 74 cents in a year. Analysts have predicted oil prices likely will continue to be erratic as perceptions shift about demand in the global economy.

“The RV industry has to be sweating,” said Jerry Conover, director of the Indiana Business Research Center at Indiana University’s Kelley School of Business.

The RV industry hit its peak in 2006, when it shipped a record 390,500 RVs.

Things began to slow in 2007 when shipments fell 9.5 percent. They plunged 33 percent in 2008, with RV manufacturers blaming the drop on high gas prices, the recession and credit being difficult to obtain for many.

The drop continued in 2009, when shipments hit a 19-year low.

The downturn hit especially hard in Elkhart County, which bills itself as the RV capital of the world. The county saw unemployment jump to 18.9 percent in March 2009 as RV factories shut down and thousands of jobs were lost.

Sales began to improve last year when shipments were up 46 percent to 242,300.

Kevin Broom, a Recreation Vehicle Industry Association spokesman, said the association was predicting sales to increase 8.6 percent this year to about 263,000. He concedes, though, gas prices could change that.

Morningstar analyst David Whiston, who focuses on Winnebago, said uncertainty in fuel costs, rather than the actual cost, is the biggest concern.

“I think it’s more the volatility that would cause consumers to stay out of the showroom than the level itself,” he said.