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Depreciation curve
Is there a consensus depreciation curve out there that people use when figuring out how old a coach to buy, and what kind of price range to expect?
i.e.
list price when new
discount off list when new (what % are people using)
then avg % depreciated years 1-5, 5-10, etc
I have trouble figuring out how much a 2013 H3-45 should sell for, in the context of its original list, its probable original ACTUAl purchase price after discount when new, and the expected depreciation after 5-6 years … all this so I can negotiate fairly w/ some knowledge base and reasonable expectations.
I”m probably over-simplifying, but this is the kind of framework I’m looking to establish while considering first time purchase of a Prevost conversion (trading from a late-model Class A DP)
Any thoughts or help? … including if I’m looking at this the wrong way
THANKS
Mark
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19 Replies
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Looking at some of the listings, one might think that similar 2013 buses might actually sell for 50-60% of their new “list price”. Liberty will be an exception since they try to protect the market for the newer Liberty coaches.
One thing to be aware of is that trading in a non-Prevost will be an expensive venture. Many dealers are not interested in having a Class A in their inventory and will only allow a wholesale value, as they are going to unload it immediately. Some will not even want to see your Class A but still give you a trade-in value.
I found out that it was dramatically better to sell our Class A and then go shopping for a bus. Let me emphasize the word “dramatically”.
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Thanks…that issue about the class A trade in is one i was worrying about
What about initial discount off new list, as starting point?
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Unlike Class A coaches, every Prevost is unique with varying equipment and options. The value of a 2013 will vary by a huge margin depending upon converter, options and, more importantly, what maintenance has been done and needs to be done. At 6 years you are looking at all new tires, likely batteries and a number of high dollar required work. If it’s been done you will pay more. If not, you need to keep your budget in line and be prepared to spend the money….immediately. Tires are going to be close to $10,000 if you have to replace all 8.
There’s not really a depreciation “curve”. More like a line extended from the upper left to the lower right at about a 40 degree angle. That’s not too bad if you consider a Class A has the same chart but it’s more like a 60 degree angle!
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…meaning 40% in 10 years?
What’s a good starting point in terms of % discount off of list at new? For conventional Class A’s we usually use 25-28%
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Go on a sale site like Marathon’s, and compare asking prices for their coaches from new to old, and you will have a pretty good idea of the depreciation curve.
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I bought my ’88 in ’99 for something like $200,000 (11 years old) and the sticker was around $800,000. The customer didn’t pay that much but that’s a pretty steep cut in 10 years.
1984 96" with 8V92TA
(remodeled Liberty Coach)
Greenwood, MO -
I bought a 2000 Liberty (sticker new about $1.2M) with 47,000 miles in 2006 for $440K.
In my opinion, based on comparable sales, I paid about 10% too much and I knew it at the time.
But here’s the kicker…I LOVE the coach. In the grand scheme of things, isn’t that worth it?
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Joel has hit upon the greatest truth there is. If you feel the coach is worth the price that is all that counts.
Let’s be honest. It is an olympic sport for buyers to brag how cheap their pus purchase was, and for sellers to brag how much they sold the bus for. Who cares? If both parties were happy with the sale price, the price was right.
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36% of list in only 6 years (loss of 64%)? That’s a lot steeper than I had thought.
Or if the sticker was discounted 20%, that’s still a loss of 56% …about 10%/year
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loss of 75% in 11 years; or if sticker was discounted 20%, a loss of 69%…7% per year on average
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Depreciation is not a constant. It starts out at a breathtaking rate initially, somewhere in the range of $1,000 per day.
As coaches age however depreciation drops to a continually lower level.
There are two important facts relating to depreciation. The first is obvious, and that is a coach is a depreciating asset, not an investment and nobody should consider a coach if depreciation is a concern.
Since depreciation is the single largest expense relating to coach ownership (until a coach value is getting into 5 figures) we all should enjoy the coach to the maximum extent possible and stop worrying about the price of fuel and maintenance. Operating costs compared to depreciation are just not significant.
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If you’re looking for economical transportation, buy a prius. If you’re looking for enjoyable transportation cheaper than a Prevost; buy a limo, hire a driver, and stay in 5 star hotels.
Seriously, there are some purchases I make in life because they make me happy.
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Well the point of my original post wasn’t to decry or lament or wail about the fact of depreciation
I was just looking to get some perspective from P owners on the shape of the curve, in order to help make trade-off decisions between new vs pre-owned; and if pre-owned, how old.
Thanks to those who have helped out with that
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Maybe this will help. We bought our first Prevost in 1990, and sold it in 2005, bought the second coach in 2004, and sold it in 2012 when we bought our current coach.
The first coach was sold after 15 years for $155,000 less than the purchase price. The second coach was sold after about 8.5 years for $135,000 less than the purchase price. I am guessing the current coach could be sold for $250,000 less than purchase price.
What that shows to me is as prices of new coaches continue to rise, so do prices of older used coaches and depreciation on a yearly basis is a larger value. When we have decided to buy a coach we were always aware of depreciation and we just adopted the attitude the money we were spending was gone. When we sold the coach whatever money was lost to depreciation was no different than money spent to travel to Europe, or on golf club memberships, or for skiing trips. The money was gone, but we had some great memories.
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This example is very helpful. THANKS
And given that you apparently bought a 6yo coach in 2012, $250K estimated depreciation since then isn’t as high as I thought it would be … maybe 4%-ish per year of what you paid…or thereabouts.
Thanks again for providing this example
M
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