What is RV ‘lot rot’ and why it could be your golden ticket to huge savings

By Dave Helgeson
Lot rot: A term used to describe a new vehicle that has sat on a dealer’s lot for an extended period and is beginning to show signs of aging.

As a former RV dealer, I can attest that lot rot is dealership jargon for the deterioration and damage done to RVs that are exposed to the elements for a prolonged period. All dealers have seen it at some point. An RV is in near-perfect condition when it’s delivered to the dealer’s sales lot from the manufacturer. But slowly, the sun, rain, dust, and debris take a toll. Within several months it begins to look like a used unit and potential buyers begin to take notice.

Signs of lot rot include:

• Rusty fasteners like nuts, bolts and screws on the exterior of the RV.
• UV begins to take a toll on the RV, fading decals, plastic trim and components like electrical hatches, propane cylinder covers and roof vents.
• The flooring begins to show signs of wear, the carpet becomes soiled, and the vinyl becomes dull.
• Dust begins to settle on hard-to-clean locations.
• Screw covers begin to gap or pop out of extrusions.

• Tires may appear a little deflated and show signs of UV deterioration.
• Small informational decals have begun to peel.
• There are signs of water intrusion.
• Cabinet door latches don’t operate as they should due to many potential buyers opening and looking in the cabinets.
• Motorhomes may not readily start due to the age of the battery and lack of receiving a maintenance charge.
• Due to supply issues, small parts may be missing that the dealer “borrowed” to fix another unit while waiting for the parts to arrive from the manufacturer. This is known as “parts robbing” in the RV industry.

Now, many of you may be thinking you want nothing to do with a new RV with lot rot, but…

Lot rot could be your golden ticket to huge savings

Here’s why: Lot rot is costing an RV dealer money, often lots of it! Once lot rot begins to set in, an RV dealer now must start investing resources in the unit. That means changing out components that are showing signs of age, the labor required to change the components and, most of all, flooring curtailments. This equates to using parts that are often in short supply that could be sold to a retail customer at a profit and RV mechanics’ time that could be billed out to a retail customer at $150 or more per hour. Since RV manufacturers won’t cover lot rot under warranty, the RV dealer is basically losing twice: once on the cost of the component and the hourly cost of the mechanic, and again on the profit they would have made on the part and retail rate of the labor rate.

Since a unit with lot rot isn’t selling, it also takes up valuable space on the sales lot that could be used to park a more popular unit that would sell faster with a better profit margin. Then there is the financial side of the equation, which is paying a monthly charge to floor the units (paying interest only on the invoice price of the unit) to a financial institution, and the dreaded curtailment. A curtailment is a monthly principal payment the financial institutions require after the RV has sat on a dealers lot long enough to acquire lot rot. (See my previous article on flooring and curtailments here.)

What is “spiffing” at a dealership?

Another hit to the RV dealer’s pocketbook involves the practice known as “spiffing”. Once an RV has been on the lot long enough to develop lot rot, the sales staff lose interest in showing the RV to customers. This happens for two reasons: First they don’t want to waste their time showing the unit to customers when they have done so numerous times before without a sale. Second, they know they will have to significantly discount the unit to interest someone enough to purchase a unit with lot rot.

A discounted unit means less commission for them, so they steer potential customers to an RV more likely to result in a sale with a higher commission. To overcome these two items and entice the sales staff to show the unit with lot rot, the dealership offers a “spiff” to the salesperson that sells the unit. The spiff is typically a predetermined amount of money (say, $1,000) that the salesperson will receive in addition to their sales commission.

RV dealers are ready to deal on any aged unit with lot rot

Trust me as a former RV dealership owner. I would do just about anything to sell an aged unit with lot rot to get it off my sales lot. I knew that continuing to let it sit on the lot would just cost me more money. In several cases, I sold units near invoice, replaced any components the customer requested that were displaying lot rot, shampooed the carpets, included an extended warranty policy and more just to make the unit go away. Basically, whatever the customer requested they received with a smile and a thank you. In today’s soft RV market, you, too, can be in the driver’s seat naming your terms and conditions when it comes to units displaying lot rot.

It’s not that lot rot units are bad RVs, but that there are one or more features that don’t resonate with average buyers. It could be an unpopular floorplan, “ugly” upholstery, lack of features or some other quirk that has kept it from selling. However, it could be the perfect floorplan to meet your needs and you might find the upholstery reminiscent of your grandma’s flowered vinyl-covered couch and just have to have it!

How do you know how long the unit has been on a dealer’s lot?

• Date of manufacture: The date the RV was manufactured is listed on a tag provided by the manufacturer. On towable RVs, it will typically be located on the lower front driver’s side of the RV. On motorized RVs, it is often located on the inside of an overhead cabinet door in the kitchen.
• Lot rot: Showing signs of lot rot as listed above.
• Tires: The date of manufacture on the tires can offer clues as to the age of the RV.
• Winterized: In northern climates, the RV will often display a tag that the plumbing system was winterized prior to leaving the factory. This indicates the RV was built and shipped in the winter. If you find a new RV on a dealer’s lot in August still bearing the tag that it has been winterized, you can safely assume it has been on the dealer’s lot a while.

Hopefully this tutorial on lot rot has taught you some useful information on how the sales of older units on a dealer’s lot work, as well as provided insight on how you might use this to your advantage when buying a new RV.

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