By William Hall, Northern Correspondent
Published: January 14 2005 02:00 | Last updated: January 14 2005 02:00

The caravan and motorhome industry, which has increased production by more than 50 per cent over the past three years, is expecting a sharp slowdown in 2005 as a result of a weakening in consumer confidence and growing competition from imports.


Over the past three years the manufacture of touring caravans and motorhomes, much of which is based in the Hull area, has emerged as one of Britain's more unlikely manufacturing success stories.

A combination of a renewed enthusiasm for domestic breaks and increasing amounts of equity released from rising house prices has led to a surge in demand for domestically produced caravans, which can cost between £10,000 and £20,000, and motorhomes, which can cost up to £50,000.

In 2003, the UK produced 28,350 touring caravans and 7,468 motorhomes. In the first 11 months of 2004, the production of touring caravans was up 17 per cent and motorhomes output was up 16 per cent, according to the National Caravan Council, an industry trade body.

Britain is the largest market in Europe for touring caravans. Last year was the third year in a row when the percentage of caravan output grew in the high teens while growth of the more expensive motorhomes was even more rapid.

However, industry officials will be monitoring closely next week's Caravan and Motorhome show in Manchester for the first signs of any slowdown.

Over the past three years attendance has risen by more than a third and Simon Coe, the show's director, says that the north-west of England is the UK's caravanning heartland.

"January is the peak time for caravan dealers," says Mr Coe. Since many caravans are built to specification, orders need to be lodged in January if buyers want their new vehicle in time for Easter when the caravanning season starts.

Graham Beacom, the NCC's new director-general, says that the industry is expecting a very modest increase in output in 2005 and most will be "happy if they produce last year's numbers".

"We are not going to see the same level of growth in 2005 that we have seen for the last few years. But we are not going to see a decline," says Richard White, marketing director of Swift, the industry leader. Swift, which has increased output from under 1,000 to more than 15,000 vehicles over the past 12 years, also sells its production under the Abbey, Ace, Bessacar, Sprite and Sterling brands. It employs over 1,000 staff and last year it increased its pre-tax profits more than threefold, to £10.5m, on a 25 per cent rise in sales, to £126.7m.

UK caravan manufacturers remain confident that the weakness of the housing market will not trigger a sudden collapse in demand for their products because most caravan buyers tend to be older and less highly geared than younger purchasers of big ticket items.

However, some observers believe that the challenges facing the caravan industry go far beyond a temporary slowdown in consumer demand. While the vast majority of the UK's traditional car and motor cycle manufacturers have either disappeared or been swallowed by foreign rivals, close to 90 per cent of the caravans and motorhomes sold in the UK are still made by domestic manufacturers.

Nevertheless, UK manufacturers remain smaller than continental rivals such as Germany's Hymer and France's Tregano. Both companies, faced with stagnant home markets, are making increasing efforts to break the tight hold of the UK caravan dealers.

Steve Sharpe of Lowdham Leisure World, a fast-growing Nottingham dealer, which handles UK and imported caravans, says that imports now account for 60 per cent of his company's motorhome sales and 30 per cent of caravan sales

Source FT.com