How Much Is Average Depreciation Per Year On A Trailer?

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Steve44

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How much is the average depreciation per year on a regular travel trailer or a fifth wheel?  For example, if the MSRP is $50,000 and if the expected selling price is $35,000 after discounts, what could you expect to get selling it yourself each year thereafter?  And how long would it take to get that fair price?  What I'm looking for is something like this:

0 - 35,000
1 - 30,000
2 - 27,000
3 - 25,000
4 - 23,000
5 - 21,000
10 - 11,000

Those numbers are just a guess.  How close did I come to a reasonable average decline in value.

Steve
 
Its hard to find a deal on a 2 to 3 year trailer because most people get 10 year loans.  And. Haven't payed much if anything on principle and ow more then the trailer is worth.  Aka they are upside down on their loans.  And don't want to sell and still ow money to the bank
 
Interesting point.  I would pay cash for mine, but I'm sure a lot of people can't do that.  So I hadn't thought about that.
 
I recently bought a 2005 which I think was about $18,000 new for $6,000 so that's 2/3rds over 10 years?  I guess the MSRP would be the variable here, feel free to look it up.  I have the 'Liberty' option.
 
Being "worth" a certain amount and being able to sell it at that amount are 2 different things.

This depends on a myriad of variables starting at where you are when you want to sell it...

Don't think there is an answer to you question.
 
Just look up the year/make/model in the online NADA RV Guide. It uses an average depreciation formula. I've read that the NADA algorithm is something like 10% initial depreciation (which is probably the typical discount off MSRP) plus 6% per year. In other words, 16% on the day it is sold and another 6% each year thereafter.  I haven't tried to validate that, but it's probably in the ballpark.

Look at some similar models of various years and see what the devaluation is year by year.
http://www.nadaguides.com/RVs



Re your initial assumption of $35k on a $50k MSRP: I may be pessimistic, but I think you would be hard-pressed to get 30% off MSRP on a $50,000 trailer. 25% would be good and 15-20% more typical, even shopping widely and bargaining hard.
 
[quote author=Gary RV Roamer]
Re your initial assumption of $35k on a $50k MSRP: I may be pessimistic, but I think you would be hard-pressed to get 30% off MSRP on a $50,000 trailer. 25% would be good and 15-20% more typical, even shopping widely and bargaining hard.
[/quote]

I disagree, we found while shopping and buying this year that 30% off msrp was not hard to find. Our trailer msrp was $39,000 and we paid $26,500. Dealer advertised listings ranged from $28,000 - $39,500 for the exact same unit.    Maybe $50,000 trailers are discounted less?  Btw, we didn't even break a sweat getting another $1500 off plus some freebies thrown in.
Edit: Fixed quote.
 
When the trailer rep said that the model we were looking at was the most popular model, I though it will be the hardest to re sell at a decent price..

If a trailer is heavily discounted, there is a reason..which  will effect resale..
 
I agree with Grbill, I was looking at a Sunset trail 32rl MSRP 44,600 and got 3 quotes of 30% off. Then I discovered a dealer in Detroit, made a phone call and without a squabble was quoted 35% off MSRP and bought the unit for $28,500 and this was in peak season or the first week of April. The good part is I am still above the Mendoza line as far as depreciation goes when looking at the NADA book.
I do believe Gary has a very good formula of the 6% per year and seems 2/3 over 10 as previously stated.
 
So Grassy, are you saying its smarter to buy an unpopular model trailer without a discounted price if you want to get the best resale value?? What am I missing here.
 
I am saying buy the best floorplan / trailer that fits your needs (budget)  but don't get focused on resale value because it is an ever moving target based on location, timing and how many other "like" models are on the market in your area when you do sell. Oh, if the economy tanks again, prices of new rigs drops which for the used ones to be sold for even less......

My AF is the only one I have ever seen to date....not model but brand.  If, when we were buying, there were 15 of them for sale in relatively same condition, we would have been able to drive a harder bargain so I see all these numbers being thrown around to be a bit silly.  If some model is the "best selling" of the year, it stands that it will also be the most resold in the used market place.  That is just a numbers game..

This is basic supply / demand economics.

I think "resale value"  is the first thing that comes out of a car salesman's mouth.  We drive our cars a minimum of 200K mikes..not a whole lot of resale value there :).
 
I think that the discount you get is based on how the manufacture sets the MSRP. Let's face it, why is the MSRP set so high? So the consumer feels like they got a deal when they made their purchase? I only received 20% off the MSRP on my Fox Mountain and the dealer I bought it from had their price at or below any Fox Mountain dealer in the country. It's simple with only a single small slide, but well built like the big brother Arctic Fox. I could have spent 3,000 less and bought a new trailer with another 4-5 feet inside with 3 slides. However, the construction is not close to mine. When I sell, I'll get more on the resale because of the quality of the trailer.
Buy a trailer and get 35% off and you are buying something in my opinion that has a MSRP set too high. Let's face it, the dealer has to make money. Some sell for less and make it on volume and some sell more and make it on price. More volume, better deal from the manufacture and lower transportation cost which can be huge on an RV. More competition can drive the price down.
I don't like pricing games. Buy food and ask for a 30% discount!! Not going to happen because the profit margin is about 2-4 cents on the dollar.
At the end of the day, resale is based on supply and demand like everything else. Quality is always in demand.

Stan

 
Stan,

"Quality is always in demand." Nicely said. 

Are you on the AF / FM forum ?

Grassy
 
Our shopping process started by finding a floor plan we liked, looking at several manufacturers that had similar plans and judging quality, then shopping for the best deal. We were able to find around 30% off msrp on every brand we looked at.
It would stand to reason that a popular floor plan would mean a popular trailer and thus more units and more competitive pricing. I don't see a negative there. If I decide to sell my trailer 15 or 20 years from now I'll hope it's still a popular unit....seems like it will be easier to sell.
I will say that if somebody is buying a new rv and is that worried about depreciation they should buy used.
 
From a quick search on the internet, it seems that in one survey folks owned their current RV for 8.4 years on average in 2011 but the data set was small.

We notice among our friends, especially as families / needs change, there is a 5 year turnaround.. this is really dependent on the quality of the rig and miles traveled.  In a couple of years, we will be quite high mileage range (long timers) so we are giving our (replacement / trade up) window as 3 to 5 years... and if  I understand AF stats, we will most likely stay within in the brand...I have a hankering for a rear kitchen model so we shall see :)

Enjoy your purchase !

Grassy
 
grassy said:
Stan,

"Quality is always in demand." Nicely said. 

Are you on the AF / FM forum ?

Grassy

I was for the trial period until they wanted me to pay. Fee was nothing, but not a lot of conversation about Fox Mountain products. Lots of great people that helped me out with different questions, but I like this forum.
For all the looking we did before we bought our Fox Mountain, I figure that most people get hung up on the glitz of some trailers instead of simple quality. We were excited when we looked at some trailers with many slides and the cool graphics, but when we looked close, cabinets, fixtures, insulation were poorly made and/or low quality. Nice on the surface, but pull the first layer back and not very attractive.
Arctic Fox products are well built, good looking without the glitz. Once we saw the Fox Mountain and found out they were made by the same company that built the Arctic Fox and in our price range, we were all in.
Thank God we waited until we understood that simple, well built, has an advantage over the other products that cause owners grief. We are very happy with Northwood products. They are not perfect, but they do a good job.

Stan
 
My question wasn't about original discount, but that's an interesting discussion, too.  My opinion is the discounts are so extravagant that the MSRP is meaningless to me.  I wouldn't spend any time calculating how much the discount is, except as a curiosity.  I would do as Grbill said: Identify the features I want, select a number of models with those features from different manufacturers (in my geographic region), then see them in person and compare the quality and price and select the best deal.  That's the free market at work.  I produces the best value for your dollar, if you do it well.  MSRP is basically a big lie.  It means nothing.  My suggested billing rate is $100 per hour, but I would never work if I asked for that.
 
I'm shopping around as well right now. All the books I have read point to NADA for estimating used RV value. As far as the MSRP goes, it's intentionally inflated right out of the gate. What I'm looking for is what a dealer actually has to pay for the RV. I found a website that list various models and what the dealer pays. May not be the exact floor plan but it gave me an idea. Search for "see dealer cost". Haven't found anything like that for cars yet but the Internet in general has made that a tough market for dealers anyway.
 
Depreciation on an RV is affected in a number of ways. Taken all together the result will greatly vary. I know from experience as a rancher that this also applies to ranch and trucking machinery such as tractors, balers, mowers, etc.

I have learned that factors such as original price, age,  maintenance records, condition of unit, whether sold outright or traded, etc., and especially monetary dollar inflation over time, all effect the depreciation dollars.

If I may give one of our own typical experience , it may be educational. We have owned five RVs since our first one purchased in 1961. Four have been sold to a dealer at the time we purchased a new RV trailer to replace the old one. (We still own our 5th one.)

Each RV that we sold when being replaced, was originally purchased at a discount from the asking price. Each was sold to the dealer where we purchased the replacement RV. Each was owned for 10 or more years and each was carefully maintained to be in excellent condition when sold.

Each of the four RVs that were sold were owned by us over the years when monetary inflation was in effect, especially after 1970's. Due to the condition, and especially due to inflation, I was able to get a high price sold to the dealer, after I bought the replacement, new, RV than what I paid for the older unit when I purchased it, measured in dollars.

For example, I sold a JayCo 5th Wheel to the dealer where I bought our new Monty just four years ago. The JayCo was 12 years old. I received $1400 more from the dealer that purchased the JaycCo than I paid for the JayCo from the same dealer 12 years previous.

Yes, considering how inflation has depreciated the dollar, there was actually  some depreciation. But measured in depreciated dollars there was actually no depreciation. However, also, as a result of inflation, depreciated dollars, the new RV actually cost more than it would have cost without inflation in the economy.

So depreciation can be accounted in a number of ways.

 

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