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NADA Pricing

by Open Roads Forum

On the scale of common experience, motorcoaches are expensive. For most of us they likely represent the most valuable class of object purchased, second only to our homes ? if we haven’t sold them in order to purchase a home on wheels! New class A motorcoaches which this report addresses have current, 2005 list prices well in excess of $100,000, especially those powered by diesel engines, and they can range in price upwards from several hundred thousand to $1-2M. They also represent rapidly depreciating assets. For people in the market buying or selling a used motorcoach, arriving at a fair current market value is not an easy task and the process can be marked by the frustration caused by a general lack of knowledge, experience, and/or information. This report attempts to at least partially fill this information gap in an open, clearly documented way.

The NADA RV Appraisal Guides

The National Automobile Dealers Association (NADA) prepares price guides for the automotive industry. As of 2005, they publish two RV guides, an online guide (see below) which offers retail pricing only, and a softcover book, N.A.D.A. Recreation Vehicle Appraisal Guide, which offers more complete pricing information.

For a 2005 price of $105, one receives a one year subscription consisting of three guides mailed at 4 month intervals. Each edition contains a series of reported values for the whole range of qualifying RVs manufactured between 1989 and 2005. The first value, published only in the January – April edition of the guide, is the ‘Suggested List’, which represents the original MSRP.

The second value is the ‘Used Wholesale/Trade In’ Price which represents the current estimated Wholesale Value of a motorcoach. It is the value a dealer might be expected to offer for a motorcoach taken in trade as part of the purchase of a new motorcoach, or otherwise taken for resale. Quoting from NADA RV Appraisal Guide on p. A-14, the Used Wholesale price, “…reflects the average wholesale value of a used unit.” Note the use of the term, ‘reflects’. The NADA RV Appraisal Guide does not offer actual, industry-wide average wholesale values of used motorcoaches or other RVs as the NADA does for automobiles. In contrast to automobiles, millions of which trade hands each years, the numbers of RVs sold in a year number only in the thousands. Because of the much smaller numbers of RV sales each year, sales which are spread over very diverse array of manufacturers and models, it is not practical to derive a true average wholesale value for each; hence, the Wholesale RV Value ‘reflects’ these averages. In reality, as we will see below, the Wholesale Value reflects a value taken from a predetermined depreciation rate.

The last value listed in the hardcopy is the ‘Used Retail’ price, the so-called ‘High Book’. According to the NADA RV Appraisal Guide, p. A-14, the Used Retail price “…reflects the average retail value of a used unit ‘ready for resale’.” Again, note the use of the term, ‘reflects’. Like the Wholesale values listed, the Used Retail prices are only estimated values. They are based on the margin over the wholesale price desired or expected on the part of the dealer by the NADA. (Note: the Used Retail price in the hardcopy of the guide is identical with the “Average Retail price in the on-line version.)

Analysis of NADA Expected Margins

To assess the margin expected by the NADA, a selection of 50 wholesale and retail price pairs for 1989-2004 motorcoaches were tabulated randomly from The NADA RV Appraisal Guide. The values were chosen without regard to manufacturer or model, but were selected to cover a wide range of wholesale values, $5,460 to $262,090. The values selected also reflected base prices, i.e., optional equipment was neglected. The calculated, 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 actually to publish their selling prices.

NADA Values for Motorcoaches: On-line Version of the Guide

As an alternative to purchasing the NADA RV Appraisal Guide, one may obtain free RV retail prices using the NADA website, at the following link,

http://www.nadaguides.com/

At the bottom-left of homepage, under ‘Used Values’, one selects (“clicks on”) ‘Motorcoaches’, and eventually arrives at a retail price table for a particular model of RV by selecting the manufacturer, year, and then model of interest. Two prices are offered, ‘Low Retail’ and ‘Average Retail’. The latter, Average Retail price, is identical with the ‘Used Retail’ published in the current edition of the hardcopy version of the Guide. This coming May, the online values will be adjusted to reflect those in the newly released hardcopy edition of the Guide.

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.”

We analyze how the Low Retail Value is derived in the next paragraph.

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 at any point in time is open to question and debate. If one searches the Open Roads Forum for opinions on what market values represent, a wide variety of expectations and uncertainties are revealed; one generally finds the opinion that wholesale values are 10-15% below the Low Values published online by the NADA. In January, 2005, values of selected diesel 32 – 36’ Country Coach Magna, Intrigue, Allure, and Monaco Windsor or Dynasty motorcoaches manufactured between 1993 and 1999, revealed that the online NADA Low Retail prices ranged from 7 to 22% over the Wholesale Prices published in the hardcopy of the Guide, and the average was 16%. 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. Details of this analysis may be found in, Post III. Evaluating Used Class A Motorcoaches: NADA Low Retail vs. Wholesale Prices.

How is the NADA Wholesale 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? To investigate this question, we analyzed the NADA RV Appraisal Guide for wholesale values, by year, for a variety of motorcoach of different types. Data for the following 1992 - 2004 motorcoaches were tabulated: 36’ Country Coach Intrigue, ~300 hp diesel; 36’ Monaco Dynasty, ~300 hp diesel; Foretravel U270, ~300 hp diesel; 34’ Fleetwood Bounder, gasoline; 34’ Winnebago Adventurer, gasoline. Although the models selected have reasonably long histories in the marketplace, their values change over time because of depreciation and inflationary pressures, and because the models change in successive years with engines of increasing power and the addition of new features such as slide outs. To compensate for these time-dependent effects, Retained Values were calculated, by the dividing the NADA Wholesale Values of each coach for each year by the Manufacturer’s Suggested List price for the year of manufacturer. For example, for a 2000 motorcoach, the Retained Value is the current 2005 wholesale value vs. the original list price in 2000. This analysis yielded the following table and revealed that the NADA Wholesale Values in any given year actually reflect a predetermined rate of depreciation of a particular model of motorcoach over time.

Year Intr Dyn U270 Bndr Advn
2004 62% 61% 62% 63% 63%
2003 60% 59% 61% 57% 60%
2002 45% 52% 44% 53% 51%
2001 44% 44% 42% 45% 51%
2000 41% 40% 36% 41% 46%
1999 37% 36% 36% 38% 37%
1998 34% 33% 32% 34% 33%
1997 31% 31% 30% 31% 32%
1996 27% 28% 31% 28% 29%
1995 26% 27% n/a 27% 29%
1994 n/a 26% n/a 26% 27%
1993 n/a 26% n/a 25% 26%
1992 n/a 25% n/a 23% 22%

 

Interestingly, when expressed in this manner, motorcoaches are viewed to depreciate essentially at the same rate over time, regardless of manufacturer, model, or even type of power plant. Obviously, here will be very larges differences in the depreciation of these motorcoaches in actual dollar terms; the graph merely shows that the depreciation rate, over time, is similar for disparate motorcoaches. Hence, according to the NADA schedule, regardless of make or model, a motorcoach is worth about 60% of its original List Price at age 1 year, and its worth declines to about 25% of its original List Price at 10 years.

So, What is the Value of the NADA Guide?

The value of a 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 marketplace. The actual ‘Fair Market Value’ of a particular motorcoach, however, is only that price negotiated between buyer and seller, and as we’ll see below this varies widely.

A Useful Resource for Determination of Fair Market Values

As we have seen, 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, a large consignment dealer in Houston, PPL Motorcoaches (http://www.pplmotorcoaches.com/). For a 10% sales fee, they will sell your motorcoach with all of the support services one might expect from a full-scale dealer. From the perspective of an objective analysis into motorcoach evaluation, these published prices offer a golden opportunity to understand the market, for 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 Post IV. Evaluating Used Class A Motorcoaches: PPL Sales & Margin Analysis, the selling price of these 45 motorcoaches had an average margin above the NADA Wholesale Value of just 5.5%. More important, however, is the finding that 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. Interesting, 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, i.e., those slideless models of the low- to mid-1990 whose wholesale values are in the $70,00 to $80,000 range.

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.

Margin over Wholesale 33% 25% 20% 15% 10% 5%
# Selling above Margin 1 2 7 15 21 24
% Selling above Margin 2.2 4.4 15.6 33.3 46.7 53.30%

 

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.

© Barry Brideau 2003-2017