In June, prices for travel trailers and fifth wheels at wholesale auction averaged just a bit over $25,000. In July—the most recent reporting month—those prices dropped to $21,750. Essentially, towable prices dropped 13.1% in the span of one month. Why such a huge drop? The answer might surprise you.
Dealer skittishness drives rigs to auction
Call it a readjustment. Back in May, the average towable unit at auction fetched a smidge over $21,000—then, boom! In the space of a month the price rocketed up to over $25,000. Where’s the volatility coming from? Last month we reported that RV dealers were getting a little skittish about their stock of 2022 towables.
With the new 2024 model years coming onto lots, RV dealers faced an overflowing problem. Reports show that a lot of the 2024 models were showing up with suggested retail prices lower than the already-on-the-lot 2022 models.
“Capitalism 101”
Industry price watcher Eric Lawrence, with Black Book, says it’s “Capitalism 101—people want it, so raise the prices.” Lawrence was referring to the huge markup in prices that the RV industry put in place during the Pandemic years. With families cooped up at home, fearful of going where they might meet up with COVID, there was a sudden run on RV dealer lots. Buy an RV, take the family away from civilization, be safe, but enjoy yourself. Hordes of buyers snapped up nearly every RV available.
Once the appetite was satiated, it took a while for industry to put the brakes on manufacturing. With lots loaded with 2022—and even 2023—models, something had to give. Evidently, June was the month the dealers decided to get those “older” but still “new” models off their lots. In July, a few 2022 and 2023 “new” units came through the auction houses, but life at the sale barn returned to something more normal. With far fewer “new” models to inflate the overall cost, towable prices dropped like a rock. Here’s the chart that shows how prices have been running.
But what about the motorized market? “Motorhomes declined for the second month in a row,” reported Eric Lawrence. But a comparison of July 2023 sale prices to those of July 2022 still shows an interesting skew. One year ago the average motorhome sold for $79,668 and the average towable unit brought $21,221. July of this year? The average motorhome selling price was $65,316—down almost 20%. But towable RVs have actually risen in value. In July 2022, the average sale price was $21,221, while this year it was $21,750—nearly a 2.5 percent increase.
RVers smell economic danger in the air
Part of that difference is certainly attributed to the few 2022 and 2023 models sold in this last reporting month, upping the average. But still, you’d think motorhomes and towables would at least work on the same curve. We asked Black Book’s Lawrence about it. His gut suggests that RV buyers are sniffing the air, and anticipating the arrival of hard economic times. They still want an RV, but comparing the price of a towable to that of the same-age motorhome, that could be leading potential buyers to hold down the fort, spend less money, and buy something without a motor in it.
Like a lot of other things in this old world, anticipating where and how the market will be next year—even next month—is just not something to place a heavy bet on.
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Without detailed analysis it’s hard to draw accurate conclusions from one month. But looking at the chart’s 1st half and 2nd half the big jump is obvious and the declining price trend is there in the last 18 months, but prices are still well above pre pandemic…and for lower quality junk.
The market is flooded with over priced poorly built units. Everyone had to see this coming. It would be a good time to open a rv salvage yard.
Anyone with business sense saw this coming. Over priced and low quality combined make lower prices an expectation. Time to delay an upgrade to a Class C and wait for a dealer to have a panic over inventory sale. My main concern is what will happen to our ability to get units serviced, those stories are also killing the golden goose.
A lot more to this market trend than the simple supply/demand equation when you dig inside it.
Demand is down for multiple reasons, foremost is the fact that American families already gave passed $1 trillion in credit card debt for the first time in history and thus, have less borrowing power. Interest rates are the highest they have been in 2 generations for those that still have some room left to borrow on credit.
Real wages are down period, from an all time high in 2019 at $78,000 down $4,000 to $74,000 in 2023. If that $500/month was discretionary income, it has evaporated. People are getting out of RVing and are selling RVs to buy diapers and pay the mortgage. That’s where the supply is coming from in the equation of supply and demand.
If I had it to do all over again I would buy the highest build quality in a towable tag trailer as soon as I could with the intention of keeping it for as long as possible. There are many makes out there that are very well built. A towable has no interior steps inside as one ages. I would buy a hitch that minimizes any sway. I would pull the tag trailer with a pickup offering a four door cab and add a topper. You then will have a replaceable tow vehicle as needed that solves durability, storage economy of repair and lower cost per mile of ownership. Campers are a lifestyle choice. Consider all aspects when you make your purchase.