Buying an RV: What is the markup on an RV, and what should I offer the dealer?

Recently, Tony Barthel posted an article on RVtravel.com titled “Ex-RV salesman offers shopping tips for new rig”. You can read it here, as well as the comments.

In the comments, a few people wanted him to provide a formula for what the markup is and what they should offer a dealer. Here is an example of one of the comments:

This is part 1. Now, do a part 2 on how to negotiate the best price for the RV you want to purchase. Give us tangible information on how to get us the best price so we don’t feel cheated at a dealership. You hear about so many horror stories.

This was a comment on the previous comment:

Thank you. From the article description, I thought that was going to be the focus.

Here is another one:

Where is the advice telling the RV Buyer the % price mark up and the % discount savings the buyer can expect off the list price as opposed to paying full list price?

A former RV salesman can easily answer these two questions.

No “formula” for getting the best deal

Tony stated in his post that there are too many variables when it comes to the percent of markup and what the dealer will accept as an offer. However, I would like to provide a little additional information why there is no “formula” for getting the best deal, in my experience.

Back when I worked at Winnebago Industries, which was more years than I care to think about, we had a 40% markup on the MSRP sheet from dealer cost. The standard automobile markup was only about 18%, so this seemed very high. However, an RV purchase is different than a car purchase, as buyers want to roll credit card debt and other non-deductible debt into the financing since RVs can sometimes be considered second homes and can be deducted.

Buyers also want an ungodly trade-in value for their current 20-year-old RV, so the dealer needs more profit margin to work with. I have worked shows for more than 30 years and have been amazed at how many people purchased a unit solely on how much they got for their trade in—not seeing what they actually paid for.

So, if you have a 40% markup on a new rig, you can give someone $10,000 more for their old unit and they feel like they “cheated” the dealer. Combine that with a 20-year loan and not only did they get $10K extra, but their payments are only $200 per month! Ouch.

Being “upside down” on your RV

I also witnessed how many people tried to trade in a unit that was three years old and they owed twice as much as the unit was worth, which is known as being “upside down” in the finance world.

It is a very dangerous game. When Fleetwood introduced the Bounder in the late 1980s, it was selling like crazy and dealers were just taking orders and not having to spend any time actually selling. With that success, Fleetwood dropped the markup to 30%. The dealers accepted that because they had 18% of the entire market with one unit, while Winnebago had 13% with everything they sold.

Working in the marketing department, I attended several dealer conferences and over 100 shows. The dealers would not allow a lower markup of the Winnebago product as it was harder to sell. So, it took more time, which means more “floor plan” aka “flooring” money as the unit sits on the lot and they needed more “room” to deal in the trades.

Fast forward to current times

First, I would like to respond to the comment that thought Tony’s article was going to focus on price. It was titled “Tips for shopping,” not buying or what to offer. I have conducted more than 500 RV Buyers Seminars all over the country and get the question on what to offer. I respond that I never talk price. As Tony stated, there are way too many variables. The old 40% markup is long gone, especially with all the financial issues the RV industry has faced along with gas prices, and the 2008-2010 collapse of housing and financial institutions. If you are simply buying on price, I would suggest not getting an RV and look at a boat, as those manufacturers and dealers are so much more up front about their pricing. No, not really.

COVID was a nightmare, as the industry went from selling 350,000 to 625,000 units in 2021, and most RV manufacturers could not supply the demand. If you wanted to purchase a Leisure Travel model, you were out on a 3-year waiting list. You had to pay MSRP at the current purchase time and all additional increases by the time of sale, not knowing what they would be. Talk about drinking the Kool-Aid! Why would anyone do that?

Insane prices

I was at a show in Raleigh, NC, just as the pandemic was exploding. The Chevy dealer had six trucks on display with an MSRP sticker and a $30,000 dealer markup! The MSRP already has a dealer markup and they were getting $30K more because of the demand.

In my opinion, it was insane, with people paying $250,000 for a 22-foot Class C on a Mercedes, and so many other crazy prices. However, if you paid any attention to other commodities during this time, you found everything had become insane. Toilet paper, milk, even chicken wings! Bottom line: Everyone selling anything put the price as high as the buying public would buy, and they did.

So, what about now

Sales of RVs have leveled over last year to around 300,000 units, which is more than half of the pinnacle but still much higher than a 10-year average. However, manufacturers and dealers rode the tidal wave of 650,000 units, thinking it would increase or stay the same and ramped up production and inventory orders. After all, they sat for two years with no inventory as the hundreds of thousands of new buyers flocked to the lots.

But if you project 650,000 units for the next year and only sell 350,000, both RV manufacturers and dealers will have a huge inventory of units that will just sit and get older. That means they will cost money in floor-planning (finance) and they are also not as attractive as new units, since they could be 2 years old by that time.

I participate in an RV Industry conference call each month. For a long time, dealers were sitting with over 150% inventory and were not ordering any new 2023 models as they had a full lot of 2022s. This meant the RV manufacturers were sitting on a huge inventory of 2023 models and had to start getting creative financially. They were putting spiffs [a bonus paid to a salesperson in addition to their commission for selling a discounted RV] on 2022 units on the lot if they reordered 2023 models. They were also discounting 2023 units in Q3 and Q4.

Huge discounts observed at RV shows

I also conduct seminars at RV shows. This January – March I noticed huge discounts on units at the show and talked with several dealers about their inventory level. Most dealers ordered whatever they could get when there was a backorder situation and financed those units, which is called floor-planning. Every three months there is a payment due on these units and the longer they sit, or have what we call a “Birthday,” they become a financial liability. Many dealers at the shows were liquidating older units at cost or even discounted below cost so as not to pay the finance charge. Then they would order a new unit that is more attractive to sell and would provide profit. “We are cutting our losses and not keeping white elephants around!” was what I heard from several dealers.

So there is no “formula” that applies as there are way too many variables and what a dealership is willing to deal with. Some dealers pay cash for their inventory and can afford to sit on a higher margin, and RV manufacturers are starting to get nervous with the lower numbers. I heard in the last conference call that some new 2024 prices are lower than the 2023, as RV manufacturers are scrambling to put units in lots.

Back in 2021, if you did not want to pay sticker price, there were 649,999 others waiting in line. At several shows, the Leisure Travel dealers were taking orders on units that were 2-3 years out and paying sticker price plus any increases when the unit was delivered! Today it is different and you need to do some homework.

Beware of price leaders

Also, keep in mind an identical unit can be outfitted with options that can raise the price by 25%-40%. Many RV manufacturers will advertise a unit at a very attractive price, which we call a price leader. When you actually look at the unit, there is no generator, only one roof air conditioner, and it comes on a smaller chassis with very little carrying capacity or has a smaller engine. Make sure you compare identical units and options, one or two axles, GVWR, CCC, and construction such as stick-and-tin versus aluminum framework with block foam insulation and one-piece fiberglass.

Then start comparing prices and you will have a better idea of what is a fair price. But keep in mind, as Tony stated, do not drive 1,000 miles to save $1000, as you will need to drive 1,000 miles to have it fixed and find a place to stay in the meantime!

 You might also enjoy this from Dave 

Updates from RV shows halfway through the spring show season—It’s a buyers’ market; units below cost

I had back-to-back RV shows the past two weeks with seminars at the Alabama RV Show in Huntsville, AL, and this past weekend at the Charleston RV Show in Charleston, SC. … What I thought was interesting was the discounted price stickers on the units as I walked around. All of them had a show price discount which is normal. However, several had a discounted price that stated it was below cost. Some were claiming $10K below cost. I did notice the prices seemed much lower than last year’s show prices and decided to do a little research.

Read the rest of Dave’s RV show insights.

Dave Solberg is a leading expert in the RV industry and the author of the “RV Handbook.”

Read more from Dave here. 

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