Depreciation from New

[lizibit]

Good evening funsters. With the cost of used motorhomes so high due to demand, do you think that buying new means value shouldn't dip as much within a year as it would have traditionally?

 

[jezport]

Motorhomes have increased in price every year for as long as I can remember. A chausson flash 03 was 24k new in 2006 and is now still worth around 16k

 

[Carpmart]

Depends what you buy. Someone paid c.£190k-£200k for my RS in 2013, it’s worth well under half of that now. Still not bad if equating it to cars. I’ve regularly turned £70k of car into half that value (or less) in just three years!

 

[Happy Jim]

My van was ~£70k new in 2010, probably ~£36k now

 

[lizibit]

Thanks. I only want to buy and sell again within the year as this is for a specific trip. Was thinking that looking at the current prices of a 2-3 year old van, may as well buy new as it shouldn't depreciate too much.

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[suavecarve]

Thanks. I only want to buy and sell again within the year as this is for a specific trip. Was thinking that looking at the current prices of a 2-3 year old van, may as well buy new as it shouldn't depreciate too much.

You ll still lose but by how much and whether that is worth it or not.
recently sold our 5 year old van for what we paid for it (28000 on clock) but in buying new I have had to fork out £4K to get it near to how our old one was (batteries solar alarm etc) so buying new and using a van for aires etc and being self sufficient will incur extra costs but a second hand one might have all the gubbins with it and the depreciation will be less

 

[lizibit]

You ll still lose but by how much and whether that is worth it or not.
recently sold our 5 year old van for what we paid for it (28000 on clock) but in buying new I have had to fork out £4K to get it near to how our old one was (batteries solar alarm etc) so buying new and using a van for aires etc and being self sufficient will incur extra costs but a second hand one might have all the gubbins with it and the depreciation will be less

Hmm, good point Those extras do add up

 

[almichie]

Hmm, good point Those extras do add up

And you won’t have to go through all the warranty snagging - someone else has done that for you. If you buy smart, you should loose a lot on second hand

 

[MisterB]

If you buy an older the van that has been well looked after and not excessive mileage, that has all the 'toys' you need, it may depreciate very little in comparison with a much newer van. If you spend a bit of your budget on some extras, you might even increase its value. There are always second hand/pre loved extras around that would add value or make it quicker to sell when you come to pass it on.

Try and find a really well looked after one owner van, around six years old (so it's likely to have had the cam belt done), that the owners have also added a few bits, which is also likely to come with the essentials i.e. hook up leads, ramps, hose etc. aswell as alarm, reversing camera, solar.
One of the downsides of an older van though is the congestion charges that are creeping in across the UK (Greater Manchester as an example), which may start making an older van less practical to own by someone living and storing their van in such areas.

 

[Coolcats]

Thanks. I only want to buy and sell again within the year as this is for a specific trip. Was thinking that looking at the current prices of a 2-3 year old van, may as well buy new as it shouldn't depreciate too much.

It’s only an opinion however, our 2018 van had healthy discount applied when we purchased it, Since the pandemic Motorhomes have increased in cost the same MoHo today could cost upwards of 15-20 K more in part due to it being a sellers market. This means today we would probably get what we paid for the MoHo. But if the market softens the depreciation will come back as it’s a buyers market, discounts return and the value of a 2nd hand MoHo drops.

Buy a Motorhome money with the view of just enjoying it whatever it costs over the next 2-3 years is what it is if it looses value by 1/3 ask yourself if you can live with loosing the capital, if so just go for it. There are no certainties in life.

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[gpat]

People often misunderstood depreciation. In business depreciation is the value now against the replacement cost and not the cost when you bought it.

Lots of people are bragging that the van they bought 3 years ago has not depreciated. If they work it out properly they will see it has. Significantly.

 

[MisterB]

People often misunderstood depreciation. In business depreciation is the value now against the replacement cost and not the cost when you bought it.

Lots of people are bragging that the van they bought 3 years ago has not depreciated. If they work it out properly they will see it has. Significantly.

But isn't depreciation in a business also linked to tax write offs?

As far as I am concerned and to make it simple enough for someone like me to understand, depreciation of a motorhome by anyone other than a business IS how much you bought it for minus how much you paid for it.
Its also extremely difficult to work out how inflation has affected the depreciation and as far as I am aware there is no 'happiness or enjoyment' factor in any of the calculation formulas.

The KISS principle works for me.

 

[gpat]

Depreciation is used by business to reduce tax burden by claiming your depreciation should be taken from your gross profit. I think that's a totally different subject though.

What I am saying is that if you bought a van for £55k 3 years ago you might find it's still worth £50k now. Thinking it's only cost you £5k. Which it has. But if the cost of the same van is now £65k and you wanted to change, it's actually depreciated by £15K.

 

[MisterB]

Depreciation is used by business to reduce tax burden by claiming your depreciation should be taken from your gross profit. I think that's a totally different subject though.

What I am saying is that if you bought a van for £55k 3 years ago you might find it's still worth £50k now. Thinking it's only cost you £5k. Which it has. But if the cost of the same van is now £65k and you wanted to change, it's actually depreciated by £15K.

But if you don't buy another van how much has it depreciated?

 

[Coolcats]

Depreciation is used by business to reduce tax burden by claiming your depreciation should be taken from your gross profit. I think that's a totally different subject though.

What I am saying is that if you bought a van for £55k 3 years ago you might find it's still worth £50k now. Thinking it's only cost you £5k. Which it has. But if the cost of the same van is now £65k and you wanted to change, it's actually depreciated by £15K.

I think your mixing concepts this is depreciation of an asset this wiki definition may help.


This article is about the concept in accounting and finance involving fixed capital goods. For economic depreciation, see Depreciation (economics) and Fixed capital § Economic depreciation. For the decrease in value of a currency, see Currency depreciation.
In accountancy, depreciation refers to two aspects of the same concept: first, the actual decrease of fair value of an asset, such as the decrease in value of factory equipment each year as it is used and wear, and second, the allocation in accounting statements of the original cost of the assets to periods in which the assets are used (depreciation with the matching principle).[1]

And the rising cost of a new MoHo is inflation not depreciation

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[lizibit]

It’s only an opinion however, our 2018 van had healthy discount applied when we purchased it, Since the pandemic Motorhomes have increased in cost the same MoHo today could cost upwards of 15-20 K more in part due to it being a sellers market. This means today we would probably get what we paid for the MoHo. But if the market softens the depreciation will come back as it’s a buyers market, discounts return and the value of a 2nd hand MoHo drops.

Buy a Motorhome money with the view of just enjoying it whatever it costs over the next 2-3 years is what it is if it looses value by 1/3 ask yourself if you can live with loosing the capital, if so just go for it. There are no certainties in life.

Will need to recoup as much as possible from this purchase as will just be for a 6 month trip. Will buy another a in a couple of years or so, so it's anyone's guess what the market will be like

 

[lizibit]

Depreciation is used by business to reduce tax burden by claiming your depreciation should be taken from your gross profit. I think that's a totally different subject though.

What I am saying is that if you bought a van for £55k 3 years ago you might find it's still worth £50k now. Thinking it's only cost you £5k. Which it has. But if the cost of the same van is now £65k and you wanted to change, it's actually depreciated by £15K.

Picking up from the point made by MisterB I won't be selling and buying straightaway, so the price of the next van doesn't really come into the equation. I just wondered if the MH world was similar to the car world in that once you've driven off the forecourt, the resale value drops off

 

[gpat]

Picking up from the point made by MisterB I won't be selling and buying straightaway, so the price of the next van doesn't really come into the equation. I just wondered if the MH world was similar to the car world in that once you've driven off the forecourt, the resale value drops off

It's not the same as the car market. Possibly because its a home on wheels and the vehicle but is only a portion often cost. Obviously a brand new one is always going to be commanding a higher value than a 6 month old one, but the fall in value is not the same as with a car.

 

[gpat]

But if you don't buy another van how much has it depreciated?

Well the effect of the depreciation is £5k.

If I dropped dead today then that's how much I would be out of pocket. However if I wanted to buy a new one with the same spec it would cost me £15k.

 

[Jonno1103]

Thanks. I only want to buy and sell again within the year as this is for a specific trip. Was thinking that looking at the current prices of a 2-3 year old van, may as well buy new as it shouldn't depreciate too much.

You'll lose 20% off the price of a new van the minute they give you the keys. The only way you'll lose less when selling is to do it privately... and hope the market stays as buoyant. For the latter, prices are set to begin to fall during the 4th qtr of 2022.

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[gpat]

You'll lose 20% off the price of a new van the minute they give you the keys. The only way you'll lose less when selling is to do it privately... and hope the market stays as buoyant. For the latter, prices are set to begin to fall during the 4th qtr of 2022.

Or buy a 1 year old one instead perhaps.

 

[Jonno1103]

Or buy a 1 year old one instead perhaps.

I doubt it, it's the punter who's stung not the dealer unless, as I said, you sell privately. For me if the van is for a single extended trip I'd hire. A few grand is a lot less than 10's of thousands and the same said few grand is probably less than what you'd lose reselling.

 

[MisterB]

Well the effect of the depreciation is £5k.

I am a bit confused over whether the effect of depreciation is the same as depreciation itself and whether there is actually any light at the end of any tunnel, I am going for a lie down in a darkened room ...

 

[Bessy765]

At the end of the day whatever it costs is how much you pay. The point about buying a previously owned good condition one is a better use of you assets. I hate to think what we have spent over the years. Being fortunate enough to have upgraded from a long collection of second hand vans (nothing wrong with that) bought an ex display one three months old in 1999, then new in 2003, new in 2008, new in 2012, last one hopefully new in 2019. The buyers for which will find quite a few extras fitted, the 2012 one had uprated to 3850, semi air, lpg tank, extra batteries, 300 watts of solar etc. as for this one when we get past using it comfortably it has Oyster sat, Thatcham cat 1 alarm, cat 5 tracker, extra deadbolts, two underslung LPG tanks, habitation air con, 700 watts solar, 200 watts lithium, Victron 2000/80 inverter charger, extra 240 and twelve volt sockets, Pioneer sat nav/camera, two TV’s, coffee maker, all season tyres, (have to stop now wife’s coming!).
not a case of what have I got!! But an example of what can be found in previously owned vans, not much of it seems to have and effect when trading in. But as to the capital loos. It’s what we like doing, worked hard all our lives, woke up the right side of the grass, living the dream. (Well will be if the DVLA/Doctors surgery ever get their act together!!)

 

[two]

If buying and selling in a short space of time, the market shouldn't have changed much, so any temporary hike will still have an influence. I'd buy a popular model. If something is offered at a discount, it may be that it's been difficult to sell at the original price and you may experience the same when you part company.
Be prepared to like it so much that you don't sell-on so quickly, though.

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[gpat]

I am a bit confused over whether the effect of depreciation is the same as depreciation itself and whether there is actually any light at the end of any tunnel, I am going for a lie down in a darkened room ...

The actual depreciation can only be calculated once the effect is complete.
Think of it as the change in net value.
If I sold my van and didn't get another the depreciation cost to me would be relatively small and that's because the value of second hand vans has gone up.
If I bought a new van every three years and inflation has taken the new costs up then the depreciation (in terms of my own balance sheet) would appear to be higher.

 

[nicholsong]

All this discussion has focused around the buying and selling costs but nobody has mentioned the 'opportunity cost' of the capital invested.

What could you have made from the capital sunk in the MH?

This varies considerably whether you invest £50K or £100K, at say 4%, plus any capital growth.

Gets even worse if one has to borrow the capital to invest in the MH.

Geoff

 

[Coolcats]

I think that’s because the OP or anyone has the capital to purchase the asset, then it’s the depreciation of that asset over x period of time. 17 years ago I paid £30k for a vehicle today I will get £25 k for it. Therefore on that lump of cash the vehicle has devalued by £5k

Now labour and materials could be added, I could work out what interest I have lost but neither of these are depreciation.

 

[nicholsong]

All this discussion has focused around the buying and selling costs but nobody has mentioned the 'opportunity cost' of the capital invested.

What could you have made from the capital sunk in the MH?

This varies considerably whether you invest £50K or £100K, at say 4%, plus any capital growth.

Gets even worse if one has to borrow the capital to invest in the MH.

Geoff

I just want to expand on my own post above as I was under a time pressure when posting it.

My own experience might illustrate my point about 'opportunity cost'

I bought our N&B Arto 69 privately in 2009 at 6 years old for £27,500, which with extras would have cost new about £60,000

I therefore had approx. £30K available to invest, compared with being tied up in a new MH.

For most of the time I have owned the Arto I have had a lot of that £30K invested in a corporate bond yielding 6.15% tax-free in an ISA, plus other investments. The bond was repaid last week and I will not get the same yield now.

Not everybody is in a position to do what I did, but I just give it as an illustration of how one should look at tying up capital in a new-buy versus a good second-hand, and take that into consideration along with aspects of deprecation.



As an adjunct, my advise would always be to buy a s/h high-quality MH at about 5-6 years as the depreciation will largely have been taken off and will not depreciate much further. In addition the running costs on high-quality are less - ours have been minimal in 13 years.

Geoff

 

[Spriddler]

When my elder son and his wife were planning to hire a m/h at eyewatering cost for a 3 months European tour in 2018 I decided to buy a s/h one for him as I reckoned that the depreciation would probably be less than the rental.
He chose and I paid for an Eldiss Autoquest for £18k and built a trailer for £60 for his 3 wheeled scooter. They covered 4800 faultless miles from their home at Worthing to Denmark, Poland and down to Italy and back through France. They had a fantastic time and we sold it privately a fortnight after they returned for 3 grand more than I paid and made a £180 profit on the trailer.
They enjoyed it so much that the following year they bought a one year old Chausson Welcome which they've used during the pandemic for several tours of the Dales, Scotland and the Lake District.