Depreciation rates

[Gary217]

I'm trying (so far unsuccessfully) to convince the wife that a newer van would be nice. She has some strong and valid reasons why changing isn't needed (such as our current van is very nice) but the biggest hurdle I have to overcome is the cost.

My argument is that while we will invest a lot of dosh in a newer van the real cost is the depreciation, and if we decided to sell in a few years time we will get a fair bit back as they hold their values better than cars. Just wondering, does anyone know of any sort of depreciation/resale value tables for vans (we (I) want another PVC) that I could reference? I appreciate that over and above that I need to add on dealer's margins etc if we use a dealer, but some scale of depreciation would be useful.
Thanks

 

[Robert Clark]

Depreciation is offset by negotiating a lower purchase price

 

[Littlewheels]

An interesting question that I’m sure we would all wish we had the answer to,however, though I haven’t got the answer you are looking for I would think that A & B Class Motorhomes have strong history in motorhoming and do hold there values and residuals a lot higher than PVC’s.

Of course an aged PVC of a highly respected brand having already lost a lot of value couldn’t loose anymore and would be future-proof value wise.

 

[The Wino]

The estimate I saw on here was 20% in the first year then 5% a year after that. It must depend on so many things not least how popular MH are there have been a few boom years for sales which has driven up new prices and residuals if that's going to continue looks doubtful. I recon if you looked at selling and buying new that 20%loss in the first year is probably about right after that the depreciation will be higher than your old van maybe by 5%of the difference.
I always look on the value of a car being next to nothing by the time we get rid of it usually after 7years or so. With the MH now 5years old I'm very pleased with what it looks like it's worth but a guide will give you historic value only.

 

[Lenny HB]

Depends on how well you buy and the make has a lot to do with it. Our first Hymer we lost 5% a year over 6 years, the last one traded it at just under 3 years lost less than 3% per year.

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[bigtwin]

Trying to use depreciation as an argument is flawed.

Your comparison of MH versus car is irrelevant.

Depreciation supports your wife’s position as depreciation on a newer vehicle will be higher than on your current van.

Whatever arguments you deploy to support your case, depreciation isn’t one of them.

Ian

 

[Charlie9038]

Your looking at least 20% the first year, then at least 5k per year after. We bought a brand new swift bolero in may 2016 for £58k, this year we were going to change but our local dealer would only offer us £38k part ex, so after various phone calls the best deal was £40k.
We have kept it as didnt fancy loosing 20k in 3 years which is when you get the most deprecition. Also now there is the xtra Vechile excess duty which pushes the cost up even more.

 

[The Wino]

Your looking at least 20% the first year, then at least 5k per year after. We bought a brand new swift bolero in may 2016 for £58k, this year we were going to change but our local dealer would only offer us £38k part ex, so after various phone calls the best deal was £40k.
We have kept it as didnt fancy loosing 20k in 3 years which is when you get the most deprecition. Also now there is the xtra Vechile excess duty which pushes the cost up even more.

We paid 38k new in 2014 and the ads suggest dealers are asking about 30 to 32k now at a similar age. Of course at the end of the day it's worth what someone will pay for it. We keep thinking about swapping but are still happy with what we have and know there will be financial pain!!.

 

[Lenny HB]

Your looking at least 20% the first year, then at least 5k per year after.

That seems very high we only lost £6k in 3 years on the last van, paid 58K our Belgium dealer gave us €60k which at the time was about £52k (& 20% off the new van) Uk dealers were offering £40k that's why we don't buy in the UK.

 

[peterc10]

Well, as others have said, it does depend on what you pay for it in the first place. I am not sure that depreciation would be as high as 20% in the first year on a popular well made motorhome, but if that is the case the near 19% discount off the list price we got on our new A class Hymer 4 years ago would have covered the first year! 2015 model bought in November 2015 when all the 2016 models were starting to arrive on the forecourt.

Or you could think about buying a second hand one. Our first motorhome was a 2008 Adria bought in 2013 and we lost £2000 on that when P/Xing it for the Hymer two and half years and 15,000 miles later. I thought that was very good depreciation when compared with a car.

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[The Wino]

Well, as others have said, it does depend on what you pay for it in the first place. I am not sure that depreciation would be as high as 20% in the first year on a popular well made motorhome, but if that is the case the near 19% discount off the list price we got on our new A class Hymer 4 years ago would have covered the first year! 2015 model bought in November 2015 when all the 2016 models were starting to arrive on the forecourt.

Or you could think about buying a second hand one. Our first motorhome was a 2008 Adria bought in 2013 and we lost £2000 on that when P/Xing it for the Hymer two and half years and 15,000 miles later. I thought that was very good depreciation when compared with a car.

I always think of depreciation as the value lost from the price paid not list price!

 

[Landy Andy]

Your wife is correct.


Again.



sorry.

Andy.

 

[peterc10]

I always think of depreciation as the value lost from the price paid not list price!

Not so in reality. After all a potential buyer does not know what I actually paid for it. They can only assess the price to pay based on the list price when new, given that discounts are often difficult to get. So whatever I pay less than list will come off the normal depreciation. Otherwise two identical second hand motorhomes would have very different values prices based upon the price paid.

 

[CazPaul]

Depends on how well you buy and the make has a lot to do with it. Our first Hymer we lost 5% a year over 6 years, the last one traded it at just under 3 years lost less than 3% per year.

You would have lost a lot more has you bought in the UK though.

 

[The Wino]

Not so in reality. After all a potential buyer does not know what I actually paid for it. They can only assess the price to pay based on the list price when new, given that discounts are often difficult to get. So whatever I pay less than list will come off the normal depreciation. Otherwise two identical second hand motorhomes would have very different values prices based upon the price paid.

I would say the opposite!! What someone will pay secondhand has no relationship to the price paid in fact in the case of cars a lot off new tends to indicate that the car is less desirable and likely to drop a lot. I count the depreciation experienced as from the price you paid to calculate it from some notional list price might make you feel better but if list is70k and you pay 60 then sell for 40k you will lose20k not 30k and to me that is depreciation.
If you in the above example got 65k because when you sold new were scarce then I would say you made a 5k profit under your definition you would still have 5k depreciation despite getting more than you paid which to me is a nonsense.

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[Robert Clark]

You would have lost a lot more has you bought in the UK though.

He’s not that stupid

 

[peterc10]

I would say the opposite!! What someone will pay secondhand has no relationship to the price paid in fact in the case of cars a lot off new tends to indicate that the car is less desirable and likely to drop a lot. I count the depreciation experienced as from the price you paid to calculate it from some notional list price might make you feel better but if list is70k and you pay 60 then sell for 40k you will lose20k not 30k and to me that is depreciation.
If you in the above example got 65k because when you sold new were scarce then I would say you made a 5k profit under your definition you would still have 5k depreciation despite getting more than you paid which to me is a nonsense.

I think you have misunderstood the point I am making. Or, more likely, I have not explained it well enough.

We live in a free market economy. That means that the financial "value" of a commodity that anybody owns is the amount that somebody is willing to pay for it. I agree entirely that that has nothing directly to do with the price they paid for it.

I agree with you that the depreciation I suffer will be the difference between what I paid for it and what its value is now. So in your first example I agree that my depreciation is the 60k I paid less its present value of £40k, which is £20k. But if somebody else has bought the identical motorhome at the list price of £70k its value now would still be £40k and their depreciation would be £30k.

And, using your second example of an appreciating asset, if I paid £60k for something and sold it for later for £65k I have got £5k appreciation. Whereas if somebody else had bought the identical item for £70k and sold it for the identical value of £65k they have got £5k depreciation.

As others have said the starting point of your depreciation (or appreciation) of an asset is always what you have paid for it. If you buy an absolute lemon for £60k and it later turns out to be worth nothing you will still loose £10k less than the person who bought the same lemon for £70k.

 

[addoaddo]

There are two parts to any losses. If for example you brought a van for £50k and a year later you saw a similar one for sale for £40k you could assume you only lost £10k. However you would be hard pressed to get £50 for your van. If you traded it in you will likely only get around £ 40k but if sold privately you might get £45k.

This sell cost makes first year depreciation look very large but following years mor reasonable.

Generally a new van does not financial sense but is normall driven by your heart.

 

[Jaws]

Bottom line is, you do not buy a motorhome as an investment .. If your good lady wants to invest, buy a house or something
A motorhome is, if you like, a luxury.. Most folk buy them / upgrade, them because they want to, want the nice things that come with the motorhome, and the better options on the later models..
Perhaps your other half is really happy in your existing motorhome and simply does not want to change ?

 

[The Wino]

I think MH are an unusual mix as I said with cars I see them as probably being worth very little when selling on. Houses I expect to appreciate. MH are something in between but I would say a bonus at the moment is very low depreciation but that could easily change and certainly higher in the first year.

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[GWAYGWAY]

So far I reckon depreciation would be £1 per mile that we have run. three years old and 30000 miles, price from £80000 to £50000. We are not selling I have just used secondhand prices allowing the buying-in price to what they would sell it for. All the options on it add not a jot to the buying in price but would for them selling it . I have invested a lot in the van and will use it until I cannot drive it.

 

[Gary217]

Thanks for the replies, quite a lot to think about. Just explain my thoughts a bit more in reply to some of the observations. I'm not looking to buy new as that does suffer the first year drop, our current van is 12 years old and I'm thinking of replacing with a 2-3 year old van.
I agree with one of the replies which says basing my argument on depreciation is flawed, what I am thinking though is to, as truthfully as possible (as I'll have to live with consequences) calculate the additional cost of renewing the van to show that while we're throwing £40k ish plus the residual on our van at a dealer, the actual cost of ownership is a lot less as the depreciation over, say, 5 years is £X.
Someone said that PVC probably depreciate faster than MoHo's - I can't comment on that except to say looking around sales forecourts I'm not so sure, but again it would be useful to know the depreciation rates to see how much dealer premium is being applied.
Finally, would happily consider a coachbuilt or A class but having, years ago, chosen to live down a very narrow track I can't get anything wider than a van there without gouging the sides or at least stripping any decals (we're not popular with delivery drivers).
Some of the figures given above are very useful though, so thanks! I'll also do a bit research and list say 10 vehicles on different forecourts, try to find their as new prices and then can work out the fall in value having stripped the £5K or so dealer margin off. I'll combine it with the views above and see if Im in any position to negotiate with her...

 

[Lenny HB]

So far I reckon depreciation would be £1 per mile that we have run. three years old and 30000 miles, price from £80000 to £50000. We are not selling I have just used secondhand prices allowing the buying-in price to what they would sell it for. All the options on it add not a jot to the buying in price but would for them selling it . I have invested a lot in the van and will use it until I cannot drive it.

I think you are being very pessimistic, Hymer's don't depreciat anything like that.

 

[SpeedyDux]

That initial 20% is effectively the VAT. Lost the minute you drive a new MH off the dealer's forecourt.

After that, value is all about whether you want the money more than the MH.

The PVC market is evolving because new PVCs are a growing trend (possibly 25% of the MH market now?) and for some buyers they are a daily drive so they can do without a car as well. Valuing used PVCs may be different from the rest of the used MHs. I wish there was a Parker's Price Guide or similar for them.

 

[Lenny HB]

That initial 20% is effectively the VAT. Lost the minute you drive a new MH off the dealer's forecourt.

That is total BS, that salesmen love to spout. You pay X for the van it's worth X when you trade VAT is totally irrelevant.

If you really believe can you explain where I lost the 20% £10,000 VAT I paid on my last van. I bought it for £58,000 traded it in for £52,000 3 years later ?

I wish there was a Parker's Price Guide or similar for them.

There is a Glasses Guide but in reality it's meaningless as very few vans are sold as standard most have between £10k to £20k of options on them.

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[BusyBuilder]

Our first Hymer was bought privately at £28,000, sold 18 months later with about an extra 16,000 miles on it and sold privately for £27,500.
Current Hymer a B544, there were two for sale a private sale (which we bought) and a dealer. The dealer was 18 months older and 12,000 more miles on and £7,000 more to buy. Similar build and options.

 

[Servo]

I buy to enjoy them not to worry about what I may or may not get in px or sale , over many years I have probably lost the price of an average new motorhome but what did I work for , loved most of them and have many great times and memories , enjoy , that’s what it is all about not profit and loss, here endeth the lesson. ???

 

[The Wino]

That initial 20% is effectively the VAT. Lost the minute you drive a new MH off the dealer's forecourt.

After that, value is all about whether you want the money more than the MH.

The PVC market is evolving because new PVCs are a growing trend (possibly 25% of the MH market now?) and for some buyers they are a daily drive so they can do without a car as well. Valuing used PVCs may be different from the rest of the used MHs. I wish there was a Parker's Price Guide or similar for them.

Not the VAT myth again!!!!!; The vat payable by the dealer is 20% on the sale less 20%on the cost price plus all the costs of running the dealership. Motorhomes dealers love people who believe Vat is the reason they offer really low trade ins on nearly new vans.

 

[SpeedyDux]

Not the VAT myth again!!!!!; The vat payable by the dealer is 20% on the sale less 20%on the cost price plus all the costs of running the dealership. Motorhomes dealers love people who believe Vat is the reason they offer really low trade ins on nearly new vans.

"Effectively" is what I wrote, because the initial depreciation is roughly the same amount. That's reality except for the lucky few who seem to have bought MHs that have incredibly low rates of depreciation.

... not the actual VAT, see.

VAT has no instrinic value except to HMRC. A value added tax that is an oxymoron. They should have stuck with Purchase Tax. At least that was an honest description.

 

[The Wino]

"Effectively" is what I wrote, because the initial depreciation is roughly the same amount. That's reality except for the lucky few who seem to have bought MHs that have incredibly low rates of depreciation.

... not the actual VAT, see.

VAT has no instrinic value except to HMRC. A value added tax that is an oxymoron. They should have stuck with Purchase Tax. At least that was an honest description.

No the description is correct because at each stage its paid on the value added by the person doing the transaction. I agree the amount is about the same but traders would like people to believe the myth that the reduction is due to vat when in reality its due to the mark up they need to make to trade. The value of anything is what someone will pay for it.

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