What’s your RV really worth? There’s a very unusual situation in the used RV valuation process these days, and the differences in methods are startling.
The demand for RVs is so high that something unheard of is happening. They’re increasing in value. Yet common wisdom tells us that RVs decrease in value, not increase.
So what’s going on, and who can we trust? We dug in to find the truth.
Let’s get started!
RV Valuation: Real or a Big Lie?
There’s an online report that the methods used to determine prices of used RVs are suspect. This report comes from a famous YouTuber named RV Wingman. He is the host of RV Show USA and posts as Wingman Wisdom.
In this four-part series, he interviews Kevin Frazier from Cheyenne Camping Center. Kevin worked for JD Powers for many years and was on the RV Dealer Advisory Board. He reports the differences in how dealers set RV prices compared to auction prices and how it has affected the market.
Auctions are the time-tested method for finding the value of any saleable item. Cheyenne Camping Center has always used data from their auctions of used RVs to determine the actual value. However, unlike cars, used RVs are rarely sold at auction.
He started noticing these discrepancies around the 2008 recession when values of new RVs plunged by 20 percent.
But it wasn’t until 2016, when JD Powers purchased NADA (National Automobile Dealers’ Association), that Kevin noticed the prices of used RVs had become unhinged from the prices they were getting at auction.
Things got even more out of control when the pandemic hit. People suddenly wanted a way to vacation and keep socially distant, and what better way than RVing?
In addition, the scarcity of some RV components caused production delays. This phenomenon led to used RVs sometimes selling for more than they cost brand new. Another reason is the MSRP values of new RVs rising steeply and supply and demand.
Real or not, it looks like a scheme afoot to influence the prices.
What is RV Valuation?
When determining an RV’s value, many variables go into this calculation. Here are a few factors that determine the value of used RVs.
The make, model, and year are important because models like Airstream retain their value better. Appraisers also consider vehicle size, mileage, engine condition, and any extras like solar panels and overall condition of the RVs interior. Proper maintenance of the engine, interior, and things like slides, awnings, and other systems like water heaters can help to hold value on used RVs.
Ultimately, as with anything you can sell, the honest answer to how much is my RV worth? Is whatever somebody will pay for it!
How Do I Find Out the Value of My RV?
There are several ways to find the value of your RV. First, some private appraisers do an excellent job of inspecting the RV for damage and comparing it to recently sold vehicles of the same model.
An RV dealer is another way of determining value. However, this report might make you want to avoid this option. And unfortunately, dealers don’t use auctions to set prices because lenders require a book value.
Additionally, there are several websites where you can obtain the resale value, such as NADA or RV Trader.
Why it Matters
Of course, the value of your RV matters to you. But how it matters to RV dealers is another thing altogether. We’ll use the big chain dealer, Camping World, as an example. To begin with, since the pandemic, this company has invested more in used RVs than new ones. Naturally, this results in larger profit margins.
However, if one of these large dealers were to go into bankruptcy, it would reveal that the liquidated value of this inventory was far less than the NADA estimates. So while it increases their profit margin, if they ever declared bankruptcy, their stock investors would have a reason to file a class action lawsuit.
Why Does RV Valuation Matter?
J.D. Power bases depreciation on varying factors, from the type of RV to specific brands. Historically you would expect to lose 20% the moment you drive your RV off the dealer’s lot. However, since the pandemic, that calculation has been turned upside down. Therefore, it’s now more important to do research than ever before.
We all want to make the most of our sale or trade-in, and this information is helpful for RVers wanting to purchase a used RV. A thorough review of this information helps ensure you’re getting a great deal before any paperwork is signed!
And now, more than ever, it’s crucial to understand RV values properly, especially when there seems to be so much discrepancy between the different appraisal methods.
Buyer Beware
Ultimately it seems that supply and demand are significant factors in the inflated prices of used RVs. Additionally, the accounting firms for large chain dealers factor in the losses to the value of their inventory from the 2008 recession. The pandemic provided the opportunity to recoup these losses by investing in used RVs to keep the pipeline of vehicles moving.
Since most people finance their recreational vehicles, they must depend on the dealer’s use of the NADA price. However, the potential for disaster resulting from inflated inventory values is real, and people seeking to purchase a used RV must be aware of these realities.
To put it simply, caveat emptor. Let the buyer beware.
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