Contrary to popular opinion, the difference between asking price/
list price and the selling price is not for the dealer to make more
money off a naive customer. It is to cover a trade-in that the
customer has an unrealistic view of what it's worth. Negotiating a
difference figure is indeed the best way to go if you don't want the
hassle of selling your old unit yourself.

In most cases, a dealer is going to ACV (actual cash value) your
trade at base NADA wholesale/average trade-in with no adds. Any
reconditioning required to be deducted from this. No matter what you
are shown for your trade on paper, you are going to get wholesale for
your trade. The dealer will not sell 2 units for the same profit as
selling 1. He deserves to make a little on both.

The problem lies in that many don't understand that the only thing
that matters is the money you're having to part with, in addition
your old coach, to get your new coach (difference figure). So many
get hung up on what they are getting for their old coach. Many
expect to buy at the selling price, which is very close to wholesale,
and still get close to retail value for their trade. Just not going
to happen unless the dealer has a dog that he's had forever.

Dealers have found that it's much more palatable to give a smaller
discount from the list price or no discount at all and put the rest
in the trade. For example, let's say you have a motorhome trade that
has a book wholesale value of $100,000 and a book retail value of
$150,000. From a dealer perspective, he knows he's going to have to
spend some money to get the unit reconditioned and he also knows that
he's not going to get anything near the $150,000 figure when he sells
it. (No one is going to pay the retail figure. He may ask $149,900
because the book with options could support it. But,
he'll be lucky to get much more than $110K-$120K on a no-trade basis
after prep costs).

Now, let's say you're looking at a $350K retail Newmar. Selling
price of $280K. ACV on the trade of $95K. Leaves a
difference of $185K. There are 3 basic ways this unit can be
priced.

1. $350K and give the customer $160K for trade for a difference of $185K.

2. $325K and give the customer $140K for trade for a difference of $185K

3. $280K and give the customer $95K for trade for a difference of $185K

Most customers will think their trade is worth at least $125K to $150K since they all think their coach is way above average. A certain number of
customers you will have no chance if you use #3. Not only will you not sell them, you'll make them mad! A certain number will want a
discount and give them retail for theirs. In #2, you could give a $25K discount and still give them more than they think theirs is
worth.

I personally like #1 best, because it covers all buyers if you
explain it correctly. You can explain that you're giving them $185K
for their trade, but that you both know that their trade is not worth
$185K. The $185K is what their trade is worth plus what I can
discount the coach. "And besides, the difference figure is what
really counts, right?"

Bottom line is that no matter how you price, some people just aren't
going to like the way you do it. NOTE: It is harder to trade used
for used as there is less mark-up in used than new.

As far as depreciation is concerned, it all has to do with how much
most people would expect in a discount from new to get them to opt
for a pre-owned coach. There are no hard rules, but the lower
inflation of new prices, the higher the depreciation. Also, the more
desirable the unit, the less the depreciation. Late model pre-owned
Newmars are coveted, so depreciation will tend to be less than other
brands.

Overall in the industry a quick rule of thumb could be as follows:

15% first year, 10% in the second, 5% in the third year, and 2% thereafter. Newmar and Jayco might be a little less because of their reputation.

Go camping more--Have more fun! Lee