Citi Lowers RV Sector Outlook Following Weak Consumer Spending and Tariffs

Citi analysts downgraded their outlook for the recreational vehicle (RV) sector because persistent macroeconomic headwinds and affordability concerns continue to suppress consumer demand. This revision reflects industry struggles, as high interest rates and trade policy uncertainty weigh on discretionary spending.

"You'd think all of that would guide back to RV use," said Coley Brady, co-founder of Alliance RV, in a recent statement regarding the industry's dampened outlook.

Declining Shipments and Production Cuts

The industry's contraction appears in recent shipment data. According to a market report, total RV shipments in May 2025 fell 15.1% year-over-year. Motorhome shipments were particularly hard hit, declining by 16.3% during the same period.

Manufacturers have responded to this cooling demand by scaling back operations. Alliance RV, for instance, trimmed most of its assembly lines from five days a week to four in March 2026. This move reduced the company's total output by approximately 10%.

Macroeconomic Drivers of the Slump

Citi analysts identified factors expected to keep customer sentiment depressed: spot rates, economic sentiment, and uncertainty regarding future trade tariffs. These elements are compounded by the high cost of financing. As of 2025, the average interest rate on RV loans stands at 8.5%, which increases the total cost of ownership for prospective buyers.

Historically, the RV industry has been highly cyclical and acts as a bellwether for consumer discretionary spending. Unlike essential retail, RV purchases are sensitive to fuel costs and credit availability. The current downturn is being compared to spending slumps observed since the Great Recession, as the combination of elevated interest rates and inflationary pressures on household budgets limits the addressable market.

What Is at Stake for Manufacturers

The sector's reliance on high-ticket financing means that any shift in central bank policy or trade agreements directly impacts order books. For manufacturers, the challenge lies in balancing production capacity with a cautious consumer base. With assembly lines operating at reduced schedules and shipment volumes failing to meet year-over-year benchmarks, the industry faces a period of inventory adjustment and market correction.