This post offers a condensed version of a previous one examining the ‘fair market value’ of used motorcoaches. The main treatment posted in mid-Feb 2005 offered tabular data and extensive analysis, in four separate posts. The following link affords access to all four posts, Main Report.
The NADA RV Appraisal Guides
The National Automobile Dealers Association (NADA) publishes two RV used price guides, an online guide which offers retail pricing only (below), and a hardcopy, the N.A.D.A. Recreation Vehicle Appraisal Guide offering more complete pricing information (NADA Hardcopy RV Guide).
The hardcopy offers three values, 1) the ‘Suggested List’, the MSRP. 2) the ‘Used Wholesale/Trade In’ value, the amount a dealer might be expected to offer for a motorcoach taken in trade or for resale which, “…reflects the average wholesale value of a used unit”. Note the use of the term, ‘reflects’. Unlike their automobile guide, the NADA RV Appraisal Guide does not offer actual, industry-wide average wholesale values of used RVs, because of the much smaller numbers of RV sales each year. 3) the ‘Used Retail’ price which, “…reflects the average retail value of a used unit ‘ready for resale’.” Again, note the use of the term, ‘reflects’. Like Wholesale values, the Used Retail prices are values which are based on the margin over the wholesale price desired or expected on the part of the dealer by the NADA. The Used Retail price in the hardcopy of the guide is identical with the “Average Retail price in the on-line version (below).
To assess the NADA expected margin, a selection of 50 wholesale and retail price pairs for 1989-2004 motorcoaches were tabulated using values chosen without regard to manufacturer or model and selected to cover a wide range, $5,460 to $262,090. The expected margins ranged from 23 to 41% over wholesale, with an average of 33.1%. For motorcoaches exceeding $100,000 in value, the margin was typically 29-30%; for those with lower values, the variability in the margin was noticeably larger, 23 – 41%. Below, the margins expected by the NADA are compared with the margins actually realized by one dealer, a company brave enough to publish their selling prices.
The NADA On-line Guide
As an alternative to purchasing the NADA RV Appraisal Guide, one may obtain free RV retail prices using the NADA website NADA Online Guide. Two prices are offered, ‘Low Retail’ and ‘Average Retail’. The latter is identical with the ‘Used Retail’ published in the current edition of the hardcopy version.
In contrast to the on-line Average Retail price, the ‘Low Retail’ price published on the NADA website has no counterpart in the hardcopy of the Guide. The NADA explains it this way:
“Low Retail Value — A low retail unit may have extensive wear and tear. Body parts may have dents and blemishes. The buyer can expect to invest in cosmetic and/or mechanical work. This vehicle should be in safe running order. Low retail vehicles usually are not found on dealer lots. Low retail should not be considered a trade-in value.”
Uncertainties in Pricing Used Motorcoaches
Because the NADA does not offer actual, average wholesale or retail values for RVs, the fair market value of any motorcoach is open to question and debate. If one searches the Forum for opinions on what market values represent, the wholesale values are generally regarded to be 10-15% below NADA online Low Values. In January, 2005, values of selected 1993 – 1999 DPs revealed that online NADA Low Retail prices were 7 - 22% over the Wholesale Prices published in the hardcopy of the Guide. Hence, there does not appear to be a fixed relationship between the NADA Wholesale and Low Retail pricing, and the range relative to the wholesale price is fairly wide. To obtain the actual NADA Wholesale Price for a given motorcoach, one must buy the Guide, visit a local library, or inquire of a banker or dealer who has a current copy, because it cannot be calculated with certainty. Costing $105 in 2005, the hardcopy Guide is a trivial investment for RV buyers serious about negotiating good prices.
How is the NADA Wholesale Used Price Derived?
If there are too few motorcoaches sold each year to establish accurate average market values, how then does the NADA derive the value published as the Wholesale Price? The NADA RV Appraisal Guide was examined for wholesale values, by year, for a variety of different MHs with gasoline and diesel engines. Retained Values were calculated as the NADA Wholesale Values of each coach for each year vs. the Manufacturer’s Suggested List price for the year of manufacturer (e.g., for a 2000 motorcoach, the Retained Value is the current 2005 wholesale value vs. the 2000 original list price). When expressed in this manner, motorcoaches were observed to depreciate at essentially the same rate over time, regardless of manufacturer, model, type of power plant, or MSRP. According to the essential NADA schedule, a motorcoach is worth about 60% of MSRP at age 1 year, and this declines to about 25% at 10 years.
So, What is the Value of the NADA Guide?
The value of a used motorcoach to at least some degree depends upon one’s point of view. Typically, a seller has in mind a price he or she would like to realize from the sale of a motorcoach, whereas a buyer likely has a different value in mind. The seller will generally wish to maximize an agreed value of a motorcoach, and the buyer to minimize it. Unless you are a dealer, you are not likely to have much direct experience on which to base an objective appraisal, which makes the NADA wholesale and retail guides useful, at least as a starting point. Another way of thinking about the NADA guides is that they reflect prices adjusted according to a predetermined depreciation rate for motorcoaches, one that the manufacturing, sales, financing, and insurance arms of the industry generally agree reflect the desired marketplace. The actual ‘Fair Market Value’ of a particular motorcoach, however, is only that price negotiated between buyer and seller.
A Useful Resource for Determination of Fair Market Values
For most of us, the major reason for uncertainty in motorcoach values is the general lack of knowledge of actual selling prices. There is, however, one company which publishes its selling prices, PPL Motorcoaches (http://www.pplmotorcoaches.com/), a large consignment dealer in Houston. For an objective analysis into motorcoach evaluation, these published prices offer a golden opportunity to understand the market: they represent ‘real’ selling prices, values which are not manipulated by a dealer juxtaposing the taking of a used model in trade for a new motorcoach. Also useful to potential buyers and sellers are the links on the PPL home page to guidelines and advice in determining a motorcoach’s fair market value, including the list of sales prices for the motorcoaches they have sold over the past two years.
From this list, we analyzed the 45 motorcoaches sold by PPL between Sept 04 – Jan 05 for their selling margins, relative to NADA wholesale prices. As detailed in the main posts (link above), these 45 motorcoaches had an average margin above the NADA Wholesale Value of just 5.5%. More important, the selling prices ranged from 30.2% below wholesale (14 of 45 coaches), to 44.5% above (31 of 45). The number of motorcoaches selling below wholesale was a significant 31% of the total!
Of the 45 coaches sold by PPL in this 5 month period, 20 had no slideouts, and of these 9 sold below wholesale. Hence, coaches without slideouts were slightly more likely to sell below wholesale, but not exclusively so. The other ‘class’ of motorcoach likely to sell below wholesale was the high end, 10+ year old motorcoach whose wholesale price approached what one could get a more recent model, of lower ‘quality’ but with a slideout or two. These slideless models, built in the early to mid-1990s had wholesale values of $70,00 - $80,000.
Keeping in mind that the Retail Price ‘expected’ by the NADA is 33% over Wholesale (see above and Post II), we analyzed the 45 motorcoaches extensively for meeting this expectation.
As can be seen, very few motorcoaches sold for the 33% margin over wholesale indicated by the NADA. In fact, nearly half (46.7%) sold for no more than 5% above, and nearly as many sold for below NADA Wholesale.
In conclusion, when evaluating a motorcoach the NADA Wholesale, Low, and Average/Retail prices should only be considered as rough guidelines. Judging from PPL sales prices, actual selling prices range from well below Wholesale to generally about 15-20% above wholesale. Rare is the sale that approaches the average NADA expected Retail Price of 33% above wholesale.
The authors thank JohnnyT for suggesting this condensed version of the post.
Bill Davis ............... Rick Swiman
(cwdavis) ...............(newwanderer)
Chapel Hill, NC ........ Boston, MA
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