RV Depreciation: Everything you could possibly want to know

rv-depreciation

After spending countless hours studying RV depreciation on all different types of RVs at different price points and different locations around the world, I’m ready to geek out with you on some numbers.  To write this article, I analyzed over 200 different RV purchases and their depreciation over time, comparing data with RVTrader and Nada to confirm my results.

I don’t claim that what I’ve put together here is perfect, but if you’re a nerd and want to know for certain whether or not you’re making a good financial decision, I hope this helps.

First, a quick note.  I’m using percentages a lot in this article and I want to make sure I explain what that means.  Suppose there is 20% depreciation on an RV that cost $100,000.  That means the RV is worth $80,000 now.

Let’s Start With the Conclusions

Conclusion #1: Buying a new RV never makes FINANCIAL sense.  Ever.  You can expect to lose approximately 21% of the total purchase price of the RV the instant you drive it off the lot.  There are loads of exceptions to that which we’ll discuss later, but that’s the average.

To be clear, I don’t necessarily think it’s foolish to buy a new RV.  It’s just that you have to make the decision for reasons other than the financial reasons.  Many RV buyers want to customize the RV to their tastes or want it to feel clean and fresh and new–and are willing to sacrifice depreciation for that.  For some RV buyers, you’ve saved your whole life to do this and so it’s more about the experience than the money.  Nothing wrong with that if you have the money to blow.  Not everything has to be a financial decision.

Conclusion #2: The best bang for your buck in terms of depreciation is to buy an RV that is 5 years old which has seen medium use–but do not get one that has seen very little use.  5 years is the plateau point at which the steep depreciation of the first few years levels off significantly.

I don’t recommend an RV that has seen little use because they are very likely to have problems.  Suppose an older gentleman buys a motorhome and then his health declines and he keeps it in storage for two years.  What about that little bit of water left in the hot water heater that spent 8 months corroding before he got it winterized?  What about the slides which haven’t been greased in two years and have been left to bake in the sun in a storage unit?  What about that tiny little crack in the ceiling that he didn’t notice until there was some internal water damage?  You get the point.

Conclusion #3: Depreciation on motorhomes is much more closely tied to the year of the motorhome and NOT the mileage.  Mileage plays only a tiny roll in the depreciation schedule for an RV because most RVs die of failures other than the driving portion of the vehicle.  Gas RVs can easily run 200,000 miles, but rarely last that long before getting significant water damage, etc.

Conclusion #4: About 85% of all new RV buyers pay SIGNIFICANTLY more for their RV than they should.  Most RV manufacturers set the MSRP 30% higher than what they could realistically be purchased for.  I’m not immune to this.  I paid too much for my first travel trailer.  The MSRP was $28,000 and I talked them down to $25,000 and thought I was really hot stuff.

I checked RVTrader.com after I purchased and found that some other dealerships around the country were selling the same travel trailer new for $5,000 less.  If I’d known this, I could have driven to another state to buy, or I could have used that as ammunition to know what the dealership could sell it for.  Lesson learned.  Next time I’ll keep my $5,000.

Conclusion #5: There is no significant difference in the depreciation schedules of a Class A compared to a Class C.  They both depreciate at almost identical percentage rates.  However, several RV salesmen reported to me that used Class C motorhomes tend to sell much faster than used Class As.  This is likely because they come at a lower price point that entices potential travel trailer buyers.

Conclusion #6: There is no significant difference between depreciation of a fifth wheel and a travel trailer for most fifth wheels.  The very high end fifth wheels depreciate a little quicker.

Depreciation on a Class A Motorhome

The following is the average depreciation schedule I determined for Class A motorhomes.  I determined these numbers after reviewing purchases made by 51 Class A motorhome buyers to determine how the RV depreciated over time.

  • One year old – This number is extremely tough to determine.  The trouble is that many buyers traded in their RVs to a dealership at the end of one year to get something different, and some dealerships tell you they are paying you a high amount for your trade and then crank up the price on the new motorhome you’re buying from them.  So honestly, this number is nearly impossible to accurately calculate, but I’d guess it’s around 21%.
  • Two years old – 22%.  There isn’t much of a difference between a one year old RV and a two year old RV.  I found the depreciation to barely budge.  They still smell new at this point!  Also, manufacturers typically call an RV a 2019 model when it’s sold in 2018, for example, so it’s tough to know how much use an RV actually had when it’s listed as being two years old.  The gross numbers don’t tell us the complete picture here.
  • Three years old – 26.7% depreciation  (meaning 26.7% of the price you paid new is now gone)
  • Four years old – 30.27% depreciation
  • Five years old – 35.98% depreciation
  • Six years old – 39.54% depreciation
  • Seven years old – 41.15% depreciation
  • Eight years old – 43.16% depreciation
  • Ten years old – 60% depreciation (I noticed a big drop on this one–I guess 10 years old sounds a lot older than 9 years old to potential buyers)
  • Thirteen years old – 69% depreciation
  • Fifteen years old – 76% depreciation
  • Twenty years old – 86% depreciation
  • Twenty-Nine years old – 96% depreciation
  • Thirty years and older – Basically hovers at about $2,000 because the RV still has some value as long as it drives

class-c-depreciation

Depreciation on a Class C Motorhome

The depreciation curve on a Class C motorhome is not nearly as severe as that of a class A.  Why?  Because Class C motorhomes cost significantly less new.

  • One year old – Like with a Class A, this number is extremely tough to determine.  The trouble is that many buyers traded in their RVs to a dealership at the end of one year to get something different, and some dealerships tell you they are paying you a high amount for your trade and then crank up the price on the new motorhome you’re buying from them.  So honestly, this number is nearly impossible to accurately calculate, but I’d guess it’s around 21%–the same as on a Class A.
  • Two years old – 22%.  There isn’t much of a difference between a one year old RV and a two year old RV.  I found the depreciation to barely budge.  They still smell new at this point!  Also, manufacturers typically call an RV a 2019 model when it’s sold in 2018, for example, so it’s tough to know how much use an RV actually had when it’s listed as being two years old.  The gross numbers don’t tell us the complete picture here.
  • Three years old – 26.6% depreciation  (meaning 26.7% of the price you paid new is now gone)
  • Four years old – 28.4% depreciation  (better than a Class A at this point by two percentage points)
  • Five years old – 37.6% depreciation (slightly worse than a Class A by two points)
  • Six years old – 39.54% depreciation
  • Seven years old – 40% depreciation
  • Eight years old – 44% depreciation
  • Ten years old – 51.69% depreciation
  • Thirteen years old – 64% depreciation
  • Fifteen years old – 69% depreciation
  • Twenty years old – 83% depreciation
  • Thirty years and older – Basically hovers at about $3,000 because the RV still has some value as long as it drives

travel-trailer-depreciation

Travel Trailer And Fifth Wheel Depreciation

First of all, I know you’re wondering if a travel trailer and a fifth wheel depreciate the same.  I analyzed them separately looking at dozens and dozens of purchases to find averages.  The answer is that the depreciation schedule is so close that it is within the margin of error.  Therefore, the depreciation schedule is identical for all intents and purposes.

Really, the only difference between depreciation on a travel trailer/fifth wheel and the depreciation on a motorhome is that a travel trailer/fifth wheel holds its value more steadily from 5 years old to 15 years old than a motorhome does.  A motorhome’s depreciation starts to level off at 5 years, but not as much as a trailer.

  • One year old – I couldn’t get proper data to analyze this number, but my best estimate is that 21% of the value is gone as soon as it’s driven off the lot.
  • Two years old – No significant difference from year one since model years are announced a year in advance–helping resale of a two year old trailer which seems to be only one year old to a potential buyer.
  • Three years old – 25% depreciation  (meaning 26.7% of the price you paid new is now gone)
  • Four years old – 29% depreciation  (better than a Class A at this point by two percentage points)
  • Five years old – 37% depreciation (slightly worse than a Class A by two points)
  • Six years old – 38% depreciation
  • Seven years old – 38% depreciation
  • Eight years old – 40% depreciation
  • Ten years old – 45% depreciation
  • Fifteen years old – 72% depreciation
  • Twenty years and older – The price tends to hover between $3,000 and $5,000 depending on how it has been kept up.  A travel trailer generally does not last as long as a motorhome because they are less expensive and so less care goes into maintaining them when old.

 Do NOT Get Ripped OFF!

After looking at these numbers for days, I am AMAZED at how many RV buyers get ripped off.  In my analysis, I saw 85% of RV buyers paying SIGNIFICANTLY MORE for the exact same RV as another buyer got for more than $5,000 less.  If you’re buying an RV from a dealership (new or used), be certain to read my guide for getting a good deal on your RV.

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