Depreciation is an important topic to understand not only for accountants but also for regular people as well. If you understand how objects lose value, you can make effective day-to-day financial decisions.
RV depreciation is no exception.
RVs can cost a lot. While most models probably lie in the $20 – 60 thousand range, there are some RVs that go well beyond $100 thousand. There are RVs out there that cost as much as half a million dollars!
But why spend so much money if you can benefit from depreciation?
On this guide, we are going to help you understand how RVs tend to depreciate so you are able to make well-weighed financial decisions.
What is depreciation?
If you are completely unfamiliar with what depreciation is, let us explain it at a very basic level.
Depreciation is the reduction of the value of an asset (e.g. transportation means, industrial machinery, etc.) caused by wear and tear. Not only that, depreciation is used in accounting to reallocate the cost of assets over their service period.
Mainly, the cost of the asset is reallocated into the net cost of the products or services that had been produced with that asset. Besides, depreciation is used in accounting for tax reduction purposes.
As we mentioned in beginning, accounting isn’t our primary concern today. Not every RV owner is an accountant, so some people would have difficulties following this material. Instead, we’ll try to teach you to use RV depreciation to your advantage. However, you should understand what depreciation is and why it exists, even if it is at the most basic level.
How we evaluated depreciation
- Nada Guides has served as the source for the RV price data. They have a rich catalog of RV going decades back, so they had all the data we needed.
- To evaluate depreciation, we’ve picked an RV series and gathered data on its list price and average retail price for each of its production year. With every model, we’ve included each of its production years.
- We chose RV models that have been around for long enough time to evaluate their depreciation. Some model lines out there had a too short lifespan or are too new to do any calculations.
- Within an RV series, we chose either the same or similar models (floorplans) to represent price changes as objectively as possible.
- For each model, we calculated how much the RV has depreciated over the years in relation to its original list price.
- In addition, to demonstrate how prices change across various RV types, we’ve picked 3 models from varying categories – one Class C motorhome, one Class A motorhome, and one camping trailer.
- We used the suggested list price and average retail values provided by Nada Guides for our evaluations.
- No extra options were added to the RV models. The prices shown are for baseline RVs. Any options are going to increase the value of an RV.
- We didn’t take mileage into account. That’s because some of the models had an option of accounting for mileage, while others didn’t. We’ll examine the effect of mileage separately a bit later.
What to keep in mind with RV value depreciation?
There are several things that you need to know in order to better understand our findings. Those are:
- Once you drive an RV out of the lot, it will lose about 30% of its value.
- Depreciation of an RV stops once its value reaches its estimated scrap value.
- Rarer classic RV’s may stop depreciating at some point and begin appreciating. We didn’t observe such a change among the models we chose, but know that such a thing can happen.
- Economic situation and fuel prices can significantly affect changes in depreciated values.
Jayco Greyhawk Series Class C motorhomes
The first RV we chose for today’s study is Jayco Greyhawk Series Class C motorhomes. This series has been around for about 16 years, which allowed us to get plenty of data to evaluate depreciation.
Fortunately for today’s material, the model line in this series has been pretty consistent, allowing us to more or less directly compare their value changes.
As we already mentioned, we used the suggested list price and average retail price to calculate the depreciation. For each model year, we used that year’s list price and average retail.
Thanks to this, we’ll be able to see how the older models have depreciated over the years. And besides, we may be able to discover a couple of interesting patterns.
|Year||Year #||Model||Suggested List Price||Average Retail||Average Total Depreciation|
The very first thing that catches the eye in our chart is the total depreciation of the 2018 M-31 DS model. It’s been on the market for a year, and its depreciation has already skyrocketed to 31.7%. This is primarily due to the immediate 30% value loss after purchase that we’ve mentioned above.
After that first spike, the depreciation rate is more or less steady.
What should be also noted is that the value of Greyhawk Series Class C motorhomes halved at about the 6-7-year mark. Given the pretty steady depreciation rate, we can assume that the newer models will cost half their original price 6-7 years after production.
The oldest line of the Greyhawk Class C motorhomes was released in 2002. That oldest line, as you can see, has depreciated by 86.7% as of January 2019. This should be pretty close to the scrap value of the 2002 M-31 RB motorhome.
Winnebago Adventurer Series Class A motorhomes
We chose Winnebago Adventurer Series Class A motorhomes as the second model. The reason we chose a Class A motorhome is that we wanted to see whether or not there are any differences between the more expensive and the cheaper RV types in terms of depreciation.
|Year||Year #||Model||Suggested List Price||Average Retail||Average Annual Depreciation|
|2018||No comparable model|
As this chart shows, there aren’t any significant differences between the patterns of the Adventurer and Greyhawk motorhomes. There was one little difference in data: because there was no 2018 Adventurer line, we don’t have price data on them.
However, the depreciation of the 2017 Adventurer and Greyhawk are pretty close to each other, so one could say that they have been similar in 2018 as well.
In addition, the value of the Adventurer RVs halved at about the 5-7-year mark, which is very close to what we observed with Greyhawk motorhomes.
What’s also quite interesting is that the depreciation for the 1999 – 2002 models stays below mid-80%. That’s probably because those models are either close or are at their scrap value.
Forest River Classic Series camping trailers
And to conclude our analysis, we’ve decided to pick up an inexpensive RV, which is Forest River Classic Series camping trailers. This is a pretty long-living model line, so it should be interesting to see how the older models have depreciated over the years.
|Year||Year #||Model||Suggested List Price||Average Retail||Average Annual Depreciation|
|2017||1||No comparable model|
What immediately catches the eye is the 23.9% depreciation of the 2018 M-823D camping trailer. Simply put, this camping trailer was losing a bit over 20% of its value after leaving the manufacturer.
That’s quite a bit lower than the 30% you are going to see in most cases. And if you continue to look through the chart, you could notice the long-term effects of this lower initial devaluation. For example, the models of this particular RV line have been reaching half their original price at the 8th or 9th years due to the lower initial depreciation.
However, the actual rate of depreciation didn’t change that much in comparison to the other two RVs. We’ll cover this aspect a bit later when we compare the data of all the RVs we examined.
Another interesting thing with this model line is that we can more or less clearly see which models hit their scrap value this year. 2004 and 2005 M-823D models most likely hit their scrap value because their average retail prices both sit at $3,400.
The models from 1997 to 2001 also hit their scrap value, but it sits lower at $1,650.
Because these models have hit their scrap value, their depreciation has stopped, as could be evident from their total depreciation. The 1997-2001 models sit between 75.1 and 78.8%, depending on the original list price, while the 2004 and 2005 models lost 64.1-65.3% of their value.
RV depreciation across different classes
Now that we have examined each of the 3 RV model lines, let’s compare their results and see whether or not the depreciation rates are the same for all of them.
|Year||Year #||Jayco Greyhawk C Class motorhome||Winnebago Adventurer A Class motorhome||Forest River Classic Series camping trailer|
Roughly speaking, the depreciation rates for all three RV classes have been similar over the years. In spite of this, the total depreciation for Forest River Classic camping trailers has been lower. This was most likely caused by the about 20% lower devaluation of the vehicle after purchase.
So can we say that RV depreciation differs across different RV types and classes? No, we can’t. On the larger scales, there probably won’t be any differences across RV types. However, in some individual cases, the depreciation rate of an RV may be slower or quicker.
This may be impacted by plenty of factors. For example, RVs with high demand will most likely depreciate slower, and vice versa.
All in all, you can’t rely on this data directly in making a decision. There are too many variables for you to be able to predict and account for. What you can do though with all this data is understand how RV depreciation works and plan your purchase accordingly.
Impact of mileage on RV depreciation
Mileage is also a pretty important factor when it comes to RV depreciation. And to illustrate how it impacts the value of an RV, we’ve picked the Jayco Greyhawk C Class motorhome line again. This time, we’ve shrunk the list a little bit, but there is still more than enough data to make some conclusions.
We’ve gathered data on this RVs value at 0 and 100,000 mileages, and here’s what we found out.
|Year||Model||Average retail difference at 0 mileage||Average retail difference at 100,000 mileage|
|2016||M-31 FK||$2,056 (+3%)||-$10,282 (-15%)|
|2014||M-31 SS||$3,804 (+7%)||-$5,978 (-11%)|
|2012||M-31 SS||$6,052 (+13%)||-$3,258 (-7%)|
|2010||M-31 SS||$7,163 (+19%)||-$1,131 (-3%)|
|2008||M-31 SS||$7,800 (+25%)||$312 (+1%)|
|2006||M-31 SS||$8,352 (+29%)||$1,440 (+5%)|
|2004||M-31 SS||$6,748 (+33%)||$1,840 (+9%)|
The picture is quite interesting with mileages. If we didn’t have any of these numbers, we’d think that the more the mileage, the more an RVs depreciation is. That still is the case, but not in the way we’d expect it to be.
Judging by the above chart, zero mileage wouldn’t affect a brand new RV model in any noticeable way, while a 100,000 mileage would probably be quite devastating for its value. But as the vehicle gets older, the negative impact of mileage on value decreases.
At about the 10-year mark, as seen from the 2008 M-31SS motorhome, a 100,000 mileage even increases the value of a vehicle! At the same time, a 0 mileage adds more and more value to an RV as it ages.
We’ve checked the data on the other two RVs as well, and believe us, the numbers have been very similar to them. So such an impact of mileage on RV depreciation definitely isn’t linked to this particular model.
In the end, mileage does play a role in the value of an RV. Negative at the beginning, the impact of mileage at some point turns around and starts to actually add value to a vehicle.
New vs used RV – which should you go for?
Now that we’ve examined all that data and made our conclusions, it is time to answer this question – should you get a new or used RV?
The answer that you will most often hear is that you should get a used RV. And we agree with this opinion.
It doesn’t make financial sense to buy a brand-new RV. It just doesn’t. Once you take the RV out of the dealership, it loses about 30% of its value. This means that you could get a slightly used, perfect-condition RV basically at a 30% discount.
Now, this doesn’t mean that buying a brand-new RV is a bad decision to make. Some people aren’t ready to sacrifice the feel of cleanness and newness for a big discount in price. You may also want to get a new RV for any other reason. As long as you have the money, getting a new RV can have its benefits.
However, the significant price difference between new and used RVs isn’t the only reason why you would want to go for a used model.
Old can be more reliable than new
As counterintuitive as this may sound, old RVs can actually be more reliable than new RVs. And the reason for this is the care of the original owner.
RVs tend to develop significant issues within the very first few years of ownership. And those issues require some solutions. RV owners will have to think about getting rid of the weak links in their vehicles. And if the original owner owned an RV for several years, then you can be pretty sure that the majority, if not all of its factory issues have been resolved.
Needless to say, if you were to buy a new RV, you would need to be ready for problems. Problems won’t happen necessarily, but should they arise, you would need to spend money to get rid of them.
An overused RV is bad… And so is an unused RV
You could have noticed that we’ve made our observations based on average retail prices. In reality, prices could go either way, both higher and lower. Needless to say, getting an RV for a very cheap price may be very tempting.
But we wouldn’t advise you to go for the cheapest option you could find. Usually, if an old RV is much cheaper than on average, it means that it has been heavily used over the years. In other words, it probably won’t be in a very good condition.
You probably know that you shouldn’t go for an RV that has been badly overused. You may be able to get it for very little money, but what may come next can’t be predicted. You may need to do a major repair or whatnot in just a couple of days.
On the other hand, very little used or unused RVs should be also avoided. The thing is that engines – especially diesel engines – live the longest when operating regularly. So if an RV has been sitting unused for a long time, it will most likely have some serious issues.
In addition, if an RV has been parked unused for a long time, it is likely that it hasn’t seen maintenance like simple oil changing. And you don’t want to deal with that.
The best options can be found in the middle. A good RV is the one that has been used enough to stay intact, but not so much that it is now in a bad condition.