Introduction & Overview
Greetings, NIRVC family of customers and friends.
Before we begin, I have a couple of brief disclosures. First, this will be my longest video to date, and I’d like to thank all of you for spending your time with me as we work through my latest thoughts on the RV industry.
As many of you know, my faith in this industry runs deep and comes from personal experience. Having been an RVer for the past 40 years, living full-time in a coach for the last 13 years, and serving as both a buyer and a dealer in the RV world, I feel an obligation to leave this industry better than I found it. I believe the best way to accomplish that is through transparency and a commitment to structurally improving both the products we build and the customer experience we provide. There’s no better way to achieve those goals than by harnessing data.
Bear with me through all the ups and downs in this presentation. By the time we reach the end, I think you’ll find there is far more hope for this industry than many of its critics would have you believe.
Today I’ll be covering 45 years of the motorhome industry, reducing it to first principles, dispelling long-held myths, examining lessons we’ve learned—or ignored—and addressing the current state of the market. None of that can be accomplished in just a few minutes, so I encourage you to use the chapter markers rather than trying to power through everything in one sitting. For my part, this presentation is going to require meaningful amounts of Diet Coke just to get through the filming.
For the sake of a lifestyle I’ve loved for four decades and an industry I’ve been part of for sixteen years, I would be remiss if I didn’t put these issues on the table. I’m fairly confident that very little of what I’ll say today will be new to customers who have purchased from us before. However, this presentation goes into much greater depth than the transparency we normally provide customers when they’re purchasing a new coach.
Throughout my career, I’ve consistently encouraged my employees that if they have a problem, they should put it on the table so that it becomes everyone’s problem. In this video, I’m doing exactly the same thing.
History, numbers, and data carry no emotion. When it comes to money, business, the economy, or personal finances, numbers tell the story clearly and unmistakably.
Every year, manufacturers introduce another piece of “gingerbread”—a flashy new feature or creature comfort—only to see it duplicated throughout the industry the following year. Whether at the manufacturer or dealer level, I’ve come to believe that in the RV industry, R&D often stands for “Research and Duplicate.”
Yet despite how advanced motorhomes have become over the past 45 years, sales have continued to decline. In spite of significant product development, unit volumes are substantially lower than they once were. That tells me the industry faces much deeper structural issues. Those are the issues I want to lay out in this presentation, because they’re topics I rarely hear anyone else discussing.
Finally, these observations come from both my personal experience as a motorhome owner since 1985 and my professional experience as a dealer since National Indoor RV Centers opened its doors in December of 2009. They are informed by tens of thousands of transactions and publicly available data.
As with all of my videos, I expect disagreement, and I welcome it. If you disagree, please share your facts and data in the comments so we can all learn from them. But an opinion without data is simply another opinion.
What Is First Principles Reasoning?
Let’s begin by applying first principles reasoning to the motorhome industry.
What is first principles reasoning? While Elon Musk popularized the term in modern business, the concept itself is actually quite simple. It is a method of reasoning that breaks a problem, idea, or system down to its most fundamental and undeniable truths. These are facts that exist independent of tradition, analogy, assumptions, emotion, or convention.
From those bedrock facts, solutions are rebuilt one logical step at a time.
First principles reasoning rejects the idea that something is correct simply because it has always been done that way. It ignores what competitors are doing and challenges every assumption until only undeniable truths remain—whether those truths are grounded in physics, human behavior, economics, or basic market fundamentals. It also accepts that the correct answer may look very different from the status quo.
Using this framework, let’s reduce the motorhome industry to its most fundamental truths.
Is RVing Still Popular in the U.S.?
Let’s start with a basic question: Is the RV lifestyle in the United States still popular? And if it is, has that popularity declined with each new generation?
In 1980, the U.S. population was approximately 226 million people. According to the 2024 U.S. Census, that number has grown to roughly 340 million. That represents population growth of about 50% over 44 years, or a compounded annual growth rate of approximately 0.93% per year.
During that same period, total RV shipments—including both towables and motorhomes—increased from 106,977 units to 333,733 units, based on RVIA historical data. That represents a 312% increase, more than six times the rate of population growth, and a compounded annual growth rate of 2.62%.
In other words, RV shipments and sales have grown about 2.8 times faster than the U.S. population. I think we can all agree that since 1980, the RV lifestyle has been extraordinarily popular.
The next question is whether interest in RVing declined after the Baby Boomer generation.
When analyzing economic and cultural shifts, the Pew Research Institute defines a generation as roughly 15 to 20 years. Since 1980, the United States has moved through the Baby Boomer, Generation X, Millennial, and Generation Z cohorts.
Many industries lost relevance during these generational transitions. Entire categories experienced declining demand or grew much more slowly than the population itself. Examples include cigarettes and tobacco products, newspapers, landline telephones, carbonated soft drinks, film photography, and video rental stores.
The question we have to ask is whether the RV lifestyle belongs in that same group, or whether something else explains the challenges facing the motorhome industry today.
To answer that, let’s examine RV shipments and population growth, along with S&P 500 returns and 30-year Treasury yields by decade across the four completed decades since 1980.
I chose 1980 as the starting point because by the late 1970s—particularly from 1975 through 1980—the motorhome industry had clearly proven its viability. Multiple manufacturers were thriving, production had stabilized following the fuel crisis, and the lifestyle was firmly established. From that point forward, it was evident that motorhomes were here to stay for decades.
I’m excluding the current decade because it’s only halfway complete.
Across all four completed decades, both total RV shipments and average annual shipments increased. RV growth significantly outpaced population growth in every decade except the 2000s. RV shipments grew seven times faster than population growth during the 1980s, 5.7 times faster during the 1990s, declined 6.8 times worse than population growth during the 2000s, and then rebounded during the 2010s to grow 8.9 times faster than the population.
The decline during the 2000s highlights the strong relationship between RV demand, equity market performance, and interest rates. During that decade, the S&P 500 produced a negative average annual return of approximately 0.9%, while the real yield—the yield after inflation—on the 30-year Treasury averaged 2.7%.
By contrast, the 2010s were exceptional for the RV industry. The S&P 500 delivered an average annual return of 13.6%, while the real yield on the 30-year Treasury averaged just 1.2%. At a real return of only 1.2%, it takes nearly 60 years to double your money. Those interest rates were unsustainably low, but while they lasted, they created a very favorable environment for RV demand.
At this point, we’ve compared RV popularity relative to population growth over four of the five decades during which motorhomes have been considered a mainstream product.
RV Growth Compared to Other Industries
Now that we’ve established the popularity of RVing relative to population growth over four of the five completed decades during which motorhomes have been considered mainstream, let’s compare the RV industry to other industries that can be measured by units or production volume since 1980.
For this comparison, I’ve excluded industries such as finance and insurance, healthcare, food and beverage, technology and information, utilities, agriculture, and textiles because they cannot be meaningfully measured in terms of unit or production volume.
From 1980 through 2024, the RV industry achieved a compounded annual growth rate of 2.62%, placing it near the top among measurable industries. What stands out most is that RV industry growth has been at least five times faster than both the automotive industry and the oil and gas industry over that same period.
From this, we can establish our first bedrock truth:
The RV lifestyle in the United States remains highly popular, and its popularity has not declined across generations.
However, when we separate total RV shipments into towables and motorhomes, a very different story begins to emerge.
Towables vs. Motorhomes: A Tale of Two Segments
We’ve established a bedrock truth: the RV lifestyle in the United States remains highly popular, and that popularity has not declined across generations. However, when total RV shipments are separated into towables and motorhomes, the story changes dramatically.
Towable shipments grew from 78,468 units in 1980 to 317,327 units by the end of 2024. That represents a 426% increase and a compounded annual growth rate of 3.1%. In other words, towables have grown approximately 3.3 times faster than the U.S. population over the same period.
That divergence sets the stage for a very different discussion when we turn our attention to motorhomes.
Motorhome shipments—including Class A, Class B, Class C, and Super C models—peaked in 1984 at 81,992 units, representing 38% of all RV shipments. By the end of 2024, shipments had fallen to just 34,891 units, accounting for only 11% of total RV shipments.
That equates to a decline of 57.4% in unit sales, or a compounded annual decline of negative 1.86%.
Over the past 45 years, motorhomes have joined the ranks of industries experiencing persistent long-term decline, alongside sectors such as textiles, coal mining, leather, printing, and furniture manufacturing. Meanwhile, towables have remained extraordinarily successful.
At first glance, that may seem counterintuitive because motorhomes were actually the faster-growing segment during the industry’s early years.
From 1980 through 1984, towable shipments increased from 78,468 units to 133,719 units, representing a compounded annual growth rate of 14.3%.
During that exact same period, motorhome shipments grew from 28,509 units to 81,992 units, achieving a compounded annual growth rate of 30.2%.
In those early years, motorhomes were growing at more than twice the rate of towables.
That brings us to another bedrock truth:
While the RV lifestyle remains extremely popular, motorhomes themselves have been in long-term decline, and their future should be a serious concern.
But before you start sucking on a gun, it’s not all bad news today—so stay with me.
Throughout history, every generation has seen companies that defined their era while others were left behind.
In the early 1900s, the buggy whip industry was enormous. But no amount of craftsmanship or tradition could save it once the automobile arrived.
A century later, Blockbuster Video dominated home entertainment, with stores seemingly on every corner, only to disappear almost overnight when streaming fundamentally changed consumer behavior.
Both examples remind us that no product or service is permanent and that the leaders of one era often fail to evolve into the next.
As a dealer who specializes exclusively in motorhomes, I have to ask some difficult questions.
What caused this sustained decline?
Can it be reversed?
Or am I presiding over a company whose fate could someday resemble that of the Westfield Whip Manufacturing Company—or, more recently, Blockbuster Video?
The short answer is that I absolutely don’t believe that’s the case.
But to answer those questions, we have to continue applying first principles reasoning to identify the true cause of the decline and determine whether a real solution exists.
One obvious question is whether motorhomes have simply become too expensive. That’s where we’ll turn next.
Are Motorhomes Too Expensive?
One obvious question is whether motorhomes have simply become too expensive.
Given the 3.1% compounded annual growth rate of towables, it’s helpful to examine what has happened to their pricing over time. For this comparison, I’ll use Airstream for two reasons. First, Airstream has been in continuous production since 1931. Second, its compounded annual growth rate closely mirrors that of the broader towable market.
Using the Airstream International as an example, the MSRP of a 25-foot model in 1980 was $16,639. By 2025, that same model carried an MSRP of $144,350. That’s a total price increase of 768% over 45 years.
For the motorhome comparison, I’ll use the 35-foot Tiffin Class A diesel because it’s the only Class A motorhome that has remained in continuous production since 1980.
In 1980, its MSRP was $61,117. By 2025, the MSRP had increased to $401,793, representing a total price increase of 557% over the same 45-year period.
That reveals an important truth.
Towables have increased in price 38% more than motorhomes. Yet towables have grown at a compounded annual rate of 3.1%, or roughly 3.3 times faster than the U.S. population, while motorhomes have declined at a compounded annual rate of negative 1.86%.
Perhaps, then, the issue isn’t simply price increases. Maybe motorhomes have become less affordable relative to buyers’ financial ability to purchase them.
To test that theory, consider this comparison.
In 1980, the MSRP of the Tiffin motorhome was $61,117, while the S&P 500 closed at 135.76. That means the motorhome cost approximately 450 times the value of the index.
Fast forward to the end of 2024. The MSRP of the 2025 Tiffin 35-foot Class A diesel was $401,793, while the S&P 500 closed at 5,881.63.
Today, that same motorhome costs only about 68 times the level of the S&P 500.
Relative to the stock market, the Tiffin motorhome costs only about 15% of what it did in 1980—or put another way, it’s approximately 6.7 times more affordable than it was 45 years ago.
At the same time, the number of features, technologies, and creature comforts has increased dramatically.
As someone who purchased his first motorhome in 1985, I can personally attest that the value delivered by today’s motorhomes far exceeds what was available in the 1980s—by well over six and a half times.
And now for the good news.
For that reason, I do not believe price is the cause of the long-term decline in motorhome sales.
In fact, the data indicates the opposite.
Motorhomes have become more affordable, not less, since 1980.
Because motorhome prices have risen only about 62% as much as towable prices, they’ve actually become roughly 85% more affordable relative to the S&P 500 over that period.
That leads us to the next logical question:
If affordability isn’t the problem, has the pool of people who can actually afford a motorhome materially shrunk? That’s what we need to examine next.
The Changing Buyer Pool: Wealth & Leisure Spending
Since motorhome prices have risen only 62% as much as towable prices, and they’ve become approximately 85% more affordable relative to the S&P 500, the next logical question is whether the pool of buyers who can afford a motorhome has materially shrunk.
That’s what we need to examine next.
I fully recognize that being “motorhome-less” is a first-world problem. No one needs a motorhome. It’s an expensive discretionary luxury. Still, the question remains: who can afford one, and has that population really declined by the same 57% that motorhome sales have since 1980?
Stay with me, because I’m about to answer that.
In 1980, the top 1% of households in the United States consisted of approximately 2.3 million people, or about 900,000 households, with an average household wealth of $1.5 million. At that time, a 35-foot Tiffin Class A diesel motorhome carried an MSRP of $61,117. A household in the top 1% could theoretically afford the equivalent of about 25 of those motorhomes.
By 2025, the top 1% had grown to approximately 3.3 million people, or about 1.33 million households, with an average household wealth of $39 million. With the MSRP of the same Tiffin coach now at $401,793, a top 1% household could theoretically purchase roughly 97 motorhomes.
This comparison isn’t intended to suggest people are actually buying dozens of motorhomes. Rather, it illustrates how wealth at the top has grown dramatically faster than either motorhome prices or inflation.
If we use the 1980 benchmark of being able to afford 25 motorhomes as our standard for equivalent affluence, then approximately 2.66 million households today—roughly the top 2% of U.S. households—meet that same benchmark.
That means the addressable market for motorhome buyers has expanded substantially.
Looking at total wealth, the combined wealth of the top 1% increased from approximately $1.35 trillion in 1980 to $51.8 trillion today—an increase of 3,844%.
The wealth of the top 2% grew from roughly $2 to $2.5 trillion in 1980 to somewhere between $70 and $80 trillion today, representing an increase of approximately 3,233%.
Clearly, neither affordability nor the wealth of the addressable buyer pool explains the long-term decline in motorhome sales.
In fact, the wealth of the potential buyer pool has grown nearly five times faster than motorhome prices. While the price of the Tiffin 35-foot Class A diesel increased about 6.6 times since 1980, the wealth of the top 2% increased more than 32 times during the same period.
Since both the size and the wealth of the potential buyer pool have grown much faster than either the general population or motorhome prices, the next question is whether affluent buyers simply changed how they spend their leisure dollars.
Have they reduced spending on domestic leisure travel?
Have they chosen entirely different ways to spend their recreational income?
According to the data, the answer is no.
Estimates from the U.S. Travel Association, the Bureau of Economic Analysis (BEA), TTSA, and Statista all show that domestic leisure travel spending has increased dramatically since 1980. This includes vacations, lodging, transportation, food and beverage, and recreational activities.
From 1980 through 2024, total leisure travel spending grew at a compounded annual rate of approximately 5% to 5.5%. That’s roughly five to six times faster than the U.S. population growth rate of 0.93% per year and about twice the growth rate of total RV shipments, which increased at 2.62% annually.
Put another way, estimated domestic leisure travel spending grew from approximately $200 billion annually in 1980 to nearly $900 billion by 2024.
During the 1980s, spending hovered around $200 billion. It continued climbing throughout the 1990s, the 2000s, and the 2010s, reaching approximately $825 to $850 billion before the COVID pandemic. Spending temporarily fell to roughly $525 to $550 billion during 2020 before rebounding to between $876 and $900 billion by 2024.
I believe another bedrock truth is now clear:
Americans love spending money on recreation and travel.
So if RVing remains popular, the buyer pool is larger and wealthier than ever, motorhomes have become more affordable relative to wealth, and Americans continue to spend record amounts on leisure travel, then another common explanation deserves closer scrutiny.
How many times have we heard that it’s greedy manufacturers who are killing the motorhome industry by continually raising prices while lowering quality?
Let’s examine both of those claims next and determine whether either one is actually supported by the data.
Debunking the Greed Myth
How many times have we heard that it’s greedy manufacturers who are killing the motorhome industry by continually raising prices while lowering quality?
Let’s examine both of those claims to determine whether either one is actually true.
I can’t cover every motorhome manufacturer in this presentation, but by focusing on the oldest and largest manufacturers—which together control roughly 56% of the market—I believe we can get a representative picture. The remaining 44% of manufacturers still have to keep their pricing competitive with these industry leaders.
Across every industry—whether it’s motorhomes, pharmaceuticals, technology, software, energy, or consumer electronics—greed eventually shows up in financial results. If manufacturers are truly exploiting customers, shareholders should be rewarded with extraordinary returns that consistently outperform the broader stock market.
So let’s look at the evidence.
Winnebago is the oldest motorhome manufacturer and became a publicly traded company on January 24, 1966. As of December 31, 2025, Winnebago’s market capitalization stood at approximately $1.143 billion—almost identical to its market capitalization of roughly $1.2 billion on December 31, 2003.
For shareholders, having the company valued at essentially the same level more than twenty years later is troubling. But the story becomes even more interesting.
During that same period, Winnebago spent approximately $1.5 billion acquiring other companies—roughly 1.3 times its current market capitalization. Yet despite those acquisitions, its market value remains virtually unchanged.
Viewed from that perspective, Winnebago has not created shareholder value over the past twenty-two years. Arguably, it has destroyed approximately $1.5 billion of capital.
To be fair, Winnebago also paid dividends and repurchased shares during that time. When those factors are included, shareholders earned a compounded annual return of approximately 2.94%, consisting of about 0.74% from dividends and 2.2% from share buybacks. Those actions prevented shareholder returns from being effectively zero.
Over that exact same period, however, the S&P 500 generated a compounded annual return of 11.15%.
Put another way, a $10,000 investment in Winnebago would have grown to roughly $20,000. That same $10,000 invested in the S&P 500 would have grown to approximately $105,964.
The S&P 500 produced more than ten times the profit.
Those results lead me to one very clear conclusion:
Winnebago is not greedy.
If greed were truly driving the business, shareholders would have enjoyed exceptional returns. Instead, the company significantly underperformed the broader market.
I don’t want Winnebago to feel like I’m picking on them, so let’s also examine Thor Industries, the world’s largest RV manufacturer.
Thor’s initial public offering took place on January 11, 1984, with a valuation of approximately $37.2 million.
Since then, Thor has effectively become the Berkshire Hathaway of the RV industry, spending approximately $4.8 billion acquiring 26 companies over the past four decades.
Over those 42 years, Thor turned its original $37.2 million valuation plus $4.8 billion of acquisition spending into a market capitalization of approximately $5.425 billion by December 31, 2025.
That means Thor organically increased its market capitalization by only about $588 million—a relatively modest gain considering the amount of capital it deployed.
Looking only at the last decade tells a similar story.
At the end of 2015, Thor’s market capitalization stood at approximately $2.95 billion. By the end of 2025, it had grown to $5.425 billion.
During that same period, however, Thor spent approximately $4.07 billion on acquisitions.
Like Winnebago, Thor arguably destroyed approximately $1.6 billion of shareholder capital between 2015 and 2025—roughly 54% of its 2015 market capitalization.
For shareholders, Thor’s history tells two very different stories.
From its IPO in January 1984 through December 31, 2009, Thor delivered a compounded annual return of approximately 14.4%, outperforming the S&P 500’s roughly 11% annual return while spending only about $400 million on acquisitions.
From January 1, 2010 through today, however, Thor’s compounded annual return fell to approximately 6.1%, compared with roughly 13.8% for the S&P 500, while the company spent approximately $4.4 billion on acquisitions.
Two conclusions naturally follow.
First, over the past sixteen years, Thor’s financial performance does not reflect greed because shareholders have not received superior returns.
Second, the more Thor has spent on acquisitions, the worse shareholder returns have become.
The same analysis applies to the only two publicly traded RV dealership groups, and the results are remarkably similar.
Despite selling very expensive products, neither manufacturers nor dealers are “cutting a fat hog.”
If publicly traded manufacturers and dealers were truly profiting excessively, industry consolidation would make financial sense, and their performance would clearly demonstrate it.
It doesn’t.
This isn’t an indictment of manufacturers or dealers.
Manufacturers walk an incredibly narrow path between unhappy customers and unhappy shareholders—a position I certainly don’t envy.
But that tension is not being driven by greed.
It’s being driven by something else.
Stick with me, because we’ll address that shortly.
For now, one conclusion is clear:
The financial performance of motorhome manufacturers simply does not support the claim that greedy manufacturers are responsible for the forty-year decline in motorhome sales.
Quality vs. Complexity in Modern Motorhomes
Now let’s address another topic we hear from customers almost every time we’re with them.
I can’t count how many times we’ve heard someone say, “They just don’t build them like they used to.”
But is that really true?
After owning motorhomes for decades and watching the industry evolve firsthand, I can say with confidence that the issue is not declining quality. Rather, it’s exploding complexity.
I want to be clear about something. These are man-made machines, and whatever man makes eventually breaks, while whatever God makes eventually dies. I’m fully aware that a small percentage of motorhomes will leave the production line with issues that require warranty attention. However, I’m not going to take those relatively few examples and extrapolate them across the entire industry as proof that today’s motorhomes are poorly built.
In other words, I’m not going to major in the minors when discussing quality.
When I purchased my first coach in 1985—a Foretravel Grand Villa, which was considered one of the finest production coaches available at the time—the craftsmanship was impressive for its era. But if I compare that coach to what manufacturers are building today, I would argue that overall quality has increased dramatically.
Materials have improved. Engineering has improved. Fit and finish have improved. Manufacturing standards have improved.
So why do so many people believe quality has actually gotten worse?
The answer is complexity.
Modern motorhomes are packed with features that simply didn’t exist in the mid-1980s.
Today we have slide-outs that dramatically increase living space. We have full-body paint instead of decals. Power awnings. Full pass-through basements with powered slide trays. Adaptive cruise control. Collision mitigation systems. Computer-assisted steering. 360-degree camera systems. Integrated climate control. All-electric appliances. Large digital control panels.
And the list just keeps growing.
Back in 1985, none of those things existed.
You had manual awnings, basic propane heating systems, and relatively simple mechanical components.
Today we expect heated tile floors, built-in Wi-Fi, smart automation, and luxury-home conveniences inside a vehicle traveling down the highway.
That’s an enormous technological leap.
The reality is simple.
More advanced systems require more components.
More components create more potential points of failure.
When something breaks, it’s easy for an owner to assume the coach is built with lower quality. But in reality, integrating Wi-Fi, automation, advanced electronics, and sophisticated safety systems into a motorhome is extraordinarily difficult. Making all of those systems communicate flawlessly with one another requires an incredible amount of engineering.
Here’s the question every RV owner should ask themselves.
Would you really give up full-body paint and go back to peeling decals?
Would you trade heated tile floors for linoleum?
Would you get rid of slide-outs and go back to the cramped interiors of decades past?
Most people wouldn’t.
We want the comfort.
We expect the convenience.
Modern coaches turn heads because they’re essentially 45-foot rolling displays of luxury—and that’s exactly what buyers have been asking manufacturers to build.
Motorhomes today are not worse than they used to be.
They’re simply far more advanced.
Complexity has exploded because consumers continue demanding more technology, more comfort, and more convenience.
That increased complexity naturally requires more maintenance.
But that’s simply the price of progress.
If you truly love the RV lifestyle, you probably wouldn’t give up those luxuries.
And neither would I.
So whenever someone confidently tells me, “They don’t build them like they used to,” I remind them that they actually build them better than they used to.
They just build them far more complex.
Based on the data we’ve reviewed so far, I do not believe declining quality, higher prices, or greedy manufacturers caused the 57% decline in motorhome sales.
Instead, the past 45 years have established several clear truths.
RVing has become more popular.
Motorhomes have become significantly more affordable relative to the stock market.
The top 2% of the wealthiest households—the primary pool of potential motorhome buyers—has grown by approximately 50%, while their household wealth has increased more than 3,200%.
Spending on domestic leisure travel has increased by approximately 450%.
So what, then, caused the long-term decline in motorhome sales?
Is it the distribution channel?
Is it bad dealers?
Possibly.
But could the answer be even more fundamental?
Could it simply come down to the basic economic principle of supply and demand?
Let’s examine that next.
The Real Cost of Ownership: Depreciation Comparison
So what caused the 57% decline in motorhomes? Is it the distribution channel? Bad dealers? Possibly. But could the answer be even more basic? Could it be as simple as the economic first principle of supply and demand? Let’s take a look at both.
I would like to start this analysis by juxtaposing the 2021 Lexus RX 350, the most popular Lexus model since 1998, with the 2021 Entegra Anthem B, the most popular floor plan that year and for several years prior. I chose the Entegra Anthem because its entire Class A diesel line production has been transferred to Tiffin Motorhomes. This avoids offending Entegra or violating my dealer agreement with a discontinued line. However, the following analysis does hold true across all motorhomes and manufacturers, just to varying degrees.
When it comes to the 2021 Lexus RX 350, there are 11 different variables that determine what the dealer’s net cost is versus what the consumer sees. Those 11 variables are MSRP, dealer discount, invoice, factory incentives, destination charge, dealer holdback, back-end incentives, volume bonus, add-ons, advertising credits, and floorplan assistance.
For ease of illustration and comparison to the 2021 Entegra Anthem, I am only going to use the MSRP, invoice, and net cost to dealer.
Starting from the top, the MSRP of the 2021 Lexus was $45,220. Its invoice was $41,800, and the national average net cost to the dealer was $41,000. Now, depending on which region of the country a dealer was in, or if they were a high-volume dealer, some dealers’ net cost was slightly lower. Since everyone doesn’t live in the Southwest region of the United States, one of the two or three most favorable regions for the lowest net cost, I am going to stick with the national average in making my points.
Now, for the 2021 Entegra Anthem B, its base MSRP was $583,380. Its invoice was $377,430, and the dealer’s net cost was $369,881.
Now let’s take a look at what happened to both the Lexus and the Anthem over their first five years of ownership. I have chosen a five-year period for comparison because the average time a person owns a motorhome is 4.3 years, according to the University of Michigan’s RV studies.
For the Lexus, I will be using the Mannheim Market Report, or MMR for short. MMR is the auto industry’s benchmark pricing guide, showing actual wholesale transaction prices from Mannheim Auto Auctions nationwide. MMR reflects real sales prices rather than asking prices and adjusts for year, make, model, trim, mileage, condition, and region. It also provides clear insights into market trends—whether values are rising, flat, or declining.
Dealers, lenders, consigners, and sellers rely on MMR because it has long proven more reliable than retail guides like Kelley Blue Book, Edmunds Appraisal, or NADA for auction values. In short, MMR is the real-time wholesale truth meter at auction.
However, dealers often quote and pay less than MMR for a trade for a number of reasons, but this video isn’t about that.
As of December 2025, the MMR average wholesale or auction price for a clean 2021 Lexus RX 350 with less than 60,000 miles was $32,150, with private-party or dealer resale values ranging from $34,000 to $35,000.
According to Edmunds’ TMV transaction average, consumers were purchasing the 2021 Lexus RX 350 in January 2021 for approximately $43,000, and Kelley Blue Book’s Fair Purchase Price range was $42,500 to $43,500.
In calculating depreciation, I am going to be conservative and use the highest average purchase price of $43,500 and the lowest MMR private-party or resale price of $34,000.
Over the first five years, the purchaser of a 2021 Lexus RX 350—worst case, assuming it was clean and had less than 60,000 miles—lost a total of 21.8%, or 4.36% per year. In absolute dollars, they lost a total of $9,500, or approximately $1,900 per year.
Now let’s compare this to the 2021 Entegra Anthem B.
Unfortunately, the RV industry doesn’t have the equivalent of the MMR for motorhomes. However, National Indoor RV Centers has a very analogous system. We have kept a database of every pre-owned motorhome we have ever sold, along with what the wholesale book value was on the day the motorhome sold. With almost 20,000 transactions, the database has become very accurate for us down to the year, make, model, floorplan, and even interior versus exterior colors.
As of January 1, 2026, the wholesale book value of the 2021 Entegra Anthem B was $234,700. For the past six months, Anthem sales have transacted at 3.3% below wholesale book value, giving us a current market value of $226,955.
What were consumers paying for Anthems in January of 2021?
I want to underscore that National Indoor RV Centers never changed our pricing or our margin over net invoice to our customers during the pandemic. Our sales margins during the pandemic remained the same as before the pandemic because we are in the business of customers for life. We knew then that we would need buyers after the pandemic as much as—if not more than—we needed them during the pandemic. Our business model has 11 different revenue streams, so we are not dependent on sales, which allows us to be a high-volume, low-margin dealer.
Unfortunately, that was not the case for the rest of the industry.
The RVDA Spader 20 Group data and J.D. Power reported motorhome dealer front-end gross profit margins between 10% and 18%, depending on the purchase price of the motorhome, in January 2021.
I want to reiterate that this was the industry’s average gross profit margin, not National Indoor RV Centers’.
With the 2021 Lexus RX 350, I used the highest average purchase price in order to produce the worst-case depreciation scenario. I want to stay conservative with the Anthem and use the low end of the industry’s gross profit range—a dealer gross profit margin of 10%.
To be clear, I am comparing the worst-case depreciation scenario for the Lexus and the best-case depreciation scenario for the Anthem.
As we previously mentioned, the net cost of the 2021 Anthem to the dealer was $369,881. Add a 10% gross profit margin, or $41,098, and we arrive at a purchase price of $410,979, which equates to roughly a 30% discount from its MSRP of $583,380.
Anyone reading the forums or social media back in January 2021 will remember seeing 30% discounts from MSRP on an Anthem quoted the majority of the time—but not from National Indoor RV Centers, mind you.
Over the first five years, the purchaser of a 2021 Entegra Anthem lost a total of 45%, best case, or 9% per year. In absolute dollars, they lost $184,024, or approximately $36,805 per year.
In my opinion, that’s the headline.
That’s the primary reason motorhome sales have been declining for the past 40 years.
Depreciation on Recreation: Motorhomes vs. Towables
This next dose of transparency might seem grim, but stick with me until the end because I truly believe that by getting this on the table, there will be better days to come.
A diesel motorhome is financed over 20 years because its useful life is supposed to be more than three times longer than the typical 72-month car loan. Yet, in just the first five years, its depreciation is more than double that of a car.
That’s right.
The depreciation on a motorhome is more than twice that of a car in the first five years.
The Entegra Anthem’s 45% depreciation over its first five years stands at the lower end of the range. Several manufacturers are above 50%, and some are approaching 60%.
Remember, the current average household wealth of the top 1% is $39 million and $30.1 million for the top 2%. Clearly, they find that level of depreciation unacceptable relative to the rest of their discretionary spending.
Just because someone financially can afford a motorhome doesn’t mean they will knowingly buy one that depreciates more than twice as fast as any other motor vehicle or towable.
They won’t pay twice the market price for groceries, gasoline, entertainment, housing, health insurance, stocks, bonds, or anything else. Why in the world do we think they would do it for a motorhome?
And it’s not like these households aren’t already spending far more than $37,000 per year in depreciation on recreation. According to the Forbes Research 2025 High-Net-Worth Survey and reports from McKinsey, Knight Frank, and Capgemini, the top 1% of households spend between $75,000 and $150,000 or more annually on vacations, travel, and entertainment—far more than enough for multiple luxury trips or a high-end motorhome lifestyle.
This is not a lifestyle or consumer financial problem.
This is an industry problem.
If motorhome depreciation were more in line with automobile depreciation—or even half of what it is today—I believe you would see a return to growth in motorhome sales.
Let’s take a moment to see why towables have grown at an impressive compounded annual growth rate of 3.1% since 1980 versus motorhomes declining at a negative 1.86%.
A 2021 Airstream International 25FB with Rear Hatch had a base MSRP of $107,400. Actual consumer purchase prices were close to MSRP due to high demand and low incentives during the pandemic. An average-to-fair purchase price was between $102,000 and $106,000, while an aggressive purchase price ranged between $98,000 and $102,000.
Today, for a clean, low-mileage 2021 International 25FB with Rear Hatch showing between 20,000 and 40,000 miles, the private-party or resale value is between $80,000 and $95,000, according to RV Trader and J.D. Power.
Again, let’s take the most conservative approach and assume it was purchased for $106,000 in January of 2021 and is currently worth the low end of the resale range—$80,000.
Over the first five years, the purchaser would have lost a total of 24.5%, or 4.9% per year. In absolute dollars, they lost a total of $26,000, or approximately $5,200 per year—only 54% as much depreciation as an Entegra Anthem.
Think about that.
Fifty-four percent as much depreciation as what an Entegra Anthem experienced.
And I used the extremes for determining the depreciation on the Airstream trailer. Had I used the midpoints, the depreciation would have been 14.2%, not 24.5%.
Regardless, this little exercise does underscore the excessive depreciation of motorhomes relative to either automobiles or towables and certainly explains why towables have grown at 3.1% per year for the past 45 years while motorhomes have declined at a negative 1.86% per year.
I suspect this has probably taken me the better part of multiple snack and bathroom breaks to get to the critical question about the future of motorhomes.
So, what is the point I’ve been leading up to today?
What are the root causes of all this excessive depreciation?
Root Causes of Excessive Depreciation
I suspect this has probably taken me the better part of multiple snack and bathroom breaks to get to the critical question about the future of motorhomes.
So, what is the point I’ve been leading up to today?
What are the root causes of all this excessive depreciation?
I firmly believe there are two causes:
- Perpetual overbuilding, year in and year out.
- Excessive markups from invoice to MSRP.
Let’s first address the overbuilding.
As we discussed earlier, I do not believe manufacturers are greedy. Over the past 45 years, shareholder returns have been anemic at best. What I do believe is that manufacturers—and to a great extent dealers—suffer from what is known as institutional imperative.
Let me put it in layman’s terms.
I have always believed the worst thing in business is a dumb competitor.
The only thing worse is trying to keep up with him.
This tendency of corporations to mindlessly imitate their peers, regardless of any financial or strategic merit, is known as institutional imperative. The term comes from business and organizational theory. It describes the tendency of organizations—especially large ones—to do something simply because that’s what other similar organizations are doing, rather than because it’s strategically optimal.
Some key points are:
First, it is peer-driven behavior. Companies, banks, or executives often make decisions based on what competitors or peers are doing.
Second, it is perceived to minimize risk. By copying peers, organizations feel safer because they won’t look out of step if things go wrong. Often, the risk is social, not financial. Executives don’t want to be blamed for being the odd one out.
Third, it leads to herd behavior. It often creates industry-wide bubbles, overproduction, or unnecessary spending.
In RVs, there is no better example than multiple manufacturers rushing to build new models simply because others are doing so.
In short, institutional imperative is:
“We’re doing it because everyone else is doing it,” even if it isn’t the best decision.
The fear is that if we don’t continually produce more units, we will lose shelf space on dealers’ lots.
The objective becomes simply to build more units.
The focus is a continual push to build more capacity.
The mentality is, “If we build it, they will come.”
All the while, the herd ignores the first principle of supply and demand.
This has led to years—in fact, decades—of overbuilding, as we will see in a minute.
The way this imperative plays out year after year is that the model year comes to an end. Manufacturers need orders for the upcoming model year to keep their production lines running. Like clockwork, every year dealers find their lots full and their flooring lines tapped out.
Manufacturers respond by giving big rebates to help dealers make room for new model year units, while also offering package deals with substantial discounts to clear their own yards of unsold inventory.
Unfortunately, whether by rebates or package discounts, manufacturers have just lowered the value of every motorhome already on the road by the amount of their rebate or discount.
And these price reductions have a cumulative effect.
Let’s look back at the 2021 Entegra Anthem and Lexus RX 350 examples.
Over the past five years, the Lexus RX 350 lost 21.8% of its original purchase price.
By that same measurement, the Entegra Anthem should have lost only $89,593 from its original purchase price of $410,969, not the actual $184,024 loss.
That excess depreciation of $94,431 over five years equates to approximately $18,886 per year.
Make no mistake.
The primary cause of depreciation is overbuilding.
Whether a manufacturer provides factory assistance to dealers is largely irrelevant. When assistance is provided, the factory helps the dealer offset losses. When it is not provided, the dealer absorbs all the losses.
Either way, the result is still the same.
Overbuilding drives selling prices lower.
The real damage is not the losses borne by manufacturers or dealers in a given model year. After all, they don’t lose money on every unit they sold that year. Their losses occur on the motorhomes left on their lots at the end of each model year—the ones built beyond demand.
No, the real harm falls squarely on all the motorhome owners already on the road through excess depreciation, resulting in a higher cost of ownership.
Since January 1, 2021, approximately 423 new Entegra Anthems have been sold. As a result of persistent overbuilding, each of those owners will experience approximately $94,431 in excess depreciation, or roughly $40 million collectively for just one model over one five-year period.
Believe me, Entegra is not the worst manufacturer when it comes to overbuilding. In fact, as of December 2025, Entegra has the second-lowest months’ supply of inventory on dealers’ lots of all manufacturers.
Meaning, the example of excess depreciation we just walked through on the Entegra Anthem would actually be on the lower side of excess depreciation for motorhomes across all manufacturers.
Yes, many motorhomes have lost far more value than the 45% the 2021 Entegra Anthem lost over the past five years.
Inventory Overhang: The Hidden Supply Challenge
Overbuilding has been an industry-wide practice and institutional imperative for decades, which we’ll look at next. But the takeaway is simple: no matter how good a deal you believed you received at purchase, your manufacturer can overbuild in future years, which will reach back and hit you in your wallet.
Today’s buyer must care not only about build quality but also trust that their manufacturer will act responsibly with future production.
Determining inventory overhang at the industry level is more an art than a science because there are three different data sources, and reconciling the differences between them is not always possible.
The three sources are:
- The RVIA wholesale shipments report, which represents all new motorhomes shipped to dealers.
- Statistical Surveys, Inc.’s retail registrations, which represent all the motorhomes actually sold.
- RV Trader.
The RVIA report includes a small percentage of shipments that U.S. manufacturers make into both Canada and the rental market. I believe it’s correct to include rental market shipments because they represent new supply and will eventually enter the retail market as used units. Used units are still supply that absorbs some amount of demand from new units.
RV Trader has three limitations.
First, not all dealers advertise on RV Trader. Many smaller independent dealers rely on their own websites, Facebook, Craigslist, or local advertising such as billboards, radio, or cable TV. RV Trader typically captures between 60% and 80% of all new motorhome listings at any given time.
Second, dealers often avoid paying to list duplicate units. RV Trader listings frequently represent available models rather than actual inventory. For example, a single listing may represent five identical motorhomes that a dealer has on the lot. Therefore, actual inventory exceeds what is shown on RV Trader.
Third, RV Trader listings capture only the current glut from the 2024 and 2025 overproduction and do not include a reconciliation of the full 2021 through 2025 production totals. There will always be a difference between historical and real-time data.
For these reasons, I use historical overhang because I believe it is directionally very accurate, while RV Trader serves as a confirming data point that the historical inventory overhang is in the ballpark.
Let’s start with this table comparing RVIA wholesale shipments minus Statistical Surveys retail sales cumulatively for the period from 2021 through October 2025 versus RV Trader’s current new motorhomes listed for sale.
I selected 2021 as the starting point because there are no new 2020 model-year motorhomes remaining in dealer inventory.
As you can see, historical overhang was 28,483 units, versus 20,165 new motorhome listings on RV Trader.
The difference of 8,318 units represents a 41% variance, which falls within RV Trader’s historical capture rate of approximately 60% to 80% of all new unsold motorhomes currently on the market.
What we can conclude from this table is that the inventory overhang is somewhere between 20,165 and 28,483 units, and probably much closer to the higher number because units shipped into Canada have never approached 41% of shipments. They are typically closer to 10%.
Again, let’s look at the direction of inventory overhang.
Is the supply increasing, decreasing, or remaining flat?
This inventory overhang table shows wholesale motorhome shipments by year from January 1, 2021, through October 31, 2025, as reported by the RVIA, less annual retail sales reported by Statistical Surveys, Inc. The difference represents annual inventory overhang.
Cumulative overhang reflects the running total of unsold units in dealer inventory and its percentage of trailing twelve-month annual sales.
The pandemic years of 2020 and 2021 were a gift to the motorhome industry.
As was typical, the industry entered 2021 with a significant inventory overhang, but pandemic-driven demand cleared it and left the industry in great shape entering 2021, evidenced by only a 1.6-month supply.
Unfortunately, denial of the market correction has caused the overhang to grow each year, reaching 84% of trailing twelve-month sales by the end of October 2025, or roughly a 10.1-month supply.
That level alone should be deeply concerning.
More troubling is that the overhang continues to increase every year.
Despite four years and ten months of declining motorhome sales, manufacturers are on pace to ship more motorhomes in 2025 than they did in 2024.
A simple forecast for the fourth quarter of 2025 suggests the year will end with approximately an 11-month supply, or 92% of trailing twelve-month sales.
That level of excess inventory will be extremely costly for every current motorhome owner through excess depreciation and a higher cost of ownership.
This table clearly illustrates why buyers of new motorhomes must have a high level of trust that their manufacturer will act responsibly with future production after they purchase their current motorhome.
Bottom line, the true inventory overhang is probably much closer to the 10.1-month supply based on actual historical data than it is to the 7.3-month supply reflected in current RV Trader listings.
Given that motorhome sales have been declining while towables have been growing, we have to ask whether this perpetual overproduction and inventory overhang also exists in towables.
This table shows towable wholesale shipments by year from January 1, 2021, through July 31, 2025, as reported by the RVIA, less annual retail sales reported by Statistical Surveys, Inc.
Here is the key comparison in my mind.
Towables clearly do not suffer from inventory overhang.
Over the past 55 months, towable retail sales exceeded wholesale shipments by 4%.
The largest inventory overhang during that period was 14.7% of annual sales, or less than a two-month supply.
Today, towables are actually running a negative inventory overhang of more than two months, equal to negative 18% of trailing twelve-month sales.
By contrast, motorhomes currently carry an inventory overhang of as much as 84% of annual sales, which is likely to reach approximately 92% once full-year 2025 data is available.
This disparity explains why towables have grown at a 3.1% compounded annual rate, while motorhome sales have declined at negative 1.86% per year for more than four decades.
That is not a glitch.
That is overbuilding.
Manufacturers are flooding the market with more motorhomes than anyone wants to buy.
The result is predictable.
Dealers slash prices to move aging inventory, and every motorhome already on the road pays the price through excessive depreciation.
Towables grew because supply stayed disciplined.
Motorhomes declined because it did not.
Overbuilding is not ambition. It is the hidden evil driving customers away—one 50% to 60% depreciation hit at a time.
Overproduction is the hidden evil and the single largest contributor to excessive depreciation and the higher cost of ownership because it impacts everyone who already owns a motorhome.
Owners have absolutely no control over the overproduction of current or future model-year motorhomes. Yet it forces lower selling prices to clear the market each year and, in turn, reduces the value of the motorhome they already own.
But, as I mentioned earlier in this video, I’d now like to discuss the second hidden evil—the smoke and mirrors that add to the cost of ownership and often cause first-time motorhome buyers to be one and done.
The Root Causes: Overproduction & Markups
But, as I mentioned earlier in this video, I would now like to discuss the second hidden evil—the smoke and mirrors that add to the cost of ownership and often cause first-time motorhome buyers to be one and done.
I’d like to paint the backdrop behind the smoke and mirrors by comparing the RV market to the automobile market. I believe you’ll quickly be able to spot the root cause differences between customer service motivations and service levels.
In 2024, Lexus sold 345,669 vehicles in the United States through 244 dealership rooftops, or approximately one rooftop for every 1,417 sales. The average Lexus vehicle sold for $57,500, equating to approximately $81.5 million in annual sales per dealer rooftop.
In 2024, the RV industry sold 333,733 RVs in the United States through 6,599 dealer rooftops. According to the IBISWorld 2024 Recreational Vehicle Dealers Report, that equates to one rooftop for every 51 sales. The average sales price of an RV in 2024, according to the RVIA, was $60,750, or roughly $3.1 million in annual sales per dealer rooftop.
Both Lexus and the entire U.S. RV industry are comparable in unit volume and average sales price. However, they are not even in the same universe when it comes to capital efficiency.
Lexus dealers enjoy approximately 26 times greater capital efficiency than RV dealers.
By this measure, you can begin to understand the differences in facilities, service capability, and overall customer experience between a Lexus dealer and an RV dealer.
Consider what this means in terms of the gross profit required to sustain each business model.
Which dealer has greater pressure to stretch margin?
Which dealer has more incentive to rely on omission or misdirection?
Which dealer is more likely to resort to smoke and mirrors?
The comparison doesn’t end there.
In 2024, roughly nine towables were sold for every motorhome sold.
That means if you were shopping for a new motorhome, for every one motorhome you saw—including Class A, Class B, Class C, and Super C combined—you would see nine towables.
Now imagine shopping for a new Lexus, and for every Lexus sedan on the dealer’s lot, you saw nine motorcycles.
How would that make you feel about purchasing a Lexus?
Would you still feel like you were buying a luxury automobile?
How much confidence would you have in the dealer’s ability to service your vehicle, maintain expertise, or invest in the facilities necessary to support your ownership experience?
Those differences matter.
They shape everything from the quality of the dealership experience to the economics of how dealers operate. They also help explain why the RV industry often relies on pricing strategies, incentives, and sales tactics that simply don’t exist in the automotive luxury market.
Understanding those structural differences is essential because they help explain why first-time motorhome buyers so often become one-and-done customers rather than lifelong owners.
The challenge isn’t simply selling a motorhome.
The challenge is creating an ownership experience compelling enough that customers want to buy another one.
And that begins with fixing the economics that drive excessive depreciation, overproduction, and the sales practices those pressures often create.
Smoke and Mirrors: The Hidden Cost of Markups
How much confidence would you have in the dealer’s ability to properly service your Lexus? Would that service experience feel like visiting a heart surgeon who also performs dental work?
These observations underscore the old adage: a jack of all trades and a master of none. They also explain the wide differences in customer service experiences and why consolidation within the industry has often destroyed capital rather than created meaningful returns for shareholders.
Let’s examine what I believe is the second-largest driver of increased cost of ownership in motorhomes and what I refer to as smoke and mirrors.
As previously discussed, the MSRP of a 2021 Lexus RX 350 was $45,220, with a national average net dealer cost of approximately $41,000. The markup from dealer cost to MSRP was 10.3% in January 2021. The average transaction price ranged from $42,500 to $43,500, according to Edmunds TMV and Kelley Blue Book Fair Purchase Pricing. Using the lower figure of $42,500, that represents a purchase price roughly 6% below MSRP.
If you’re a first-time motorhome buyer bringing your automobile purchasing experience to the negotiating table, a 10% discount off MSRP feels like an exceptional deal.
Unfortunately, this is where the smoke and mirrors begin.
Let’s apply that same automobile-buying logic to a motorhome.
As previously discussed, the MSRP of a 2021 Entegra Anthem B was $583,380, with a dealer net cost of $369,881. The markup from dealer cost to MSRP was approximately 58%—not 6% like the Lexus.
If a first-time motorhome buyer negotiated what they believed was a strong automobile-style deal of 10% off MSRP, the purchase price would have been $525,042. That buyer likely walked away believing they had secured a tremendous deal, unaware that the dealer earned $155,161, representing a 42% gross profit margin.
Earlier in this video, we discussed data from the RVDA Spader 20 Group and J.D. Power showing that motorhome dealers’ front-end gross profit margins typically ranged from 10% to 18%, depending on the purchase price.
I stated we would use the lower end of that range—10%—to conservatively calculate depreciation. I also emphasized that National Indoor RV Centers did not then, and does not now, sell motorhomes anywhere near a 10% gross profit margin.
While I personally consider a 10% gross margin excessive, I will continue using it here because it more accurately represents the broader market than National Indoor RV Centers’ pricing.
At a 10% gross profit margin, the market selling price of the 2021 Entegra Anthem B would have been $410,979.
That is $114,063 less than the $525,042 paid by a first-time buyer who believed 10% off MSRP was a great deal.
When you combine this $114,063 overpayment with the first five years of depreciation totaling $184,024, the result is a staggering $298,087 lost in just the first five years of ownership.
That buyer effectively lost 57% of the original purchase price, compared to 45% for a buyer who paid market value.
Let’s recap.
If motorhomes were not plagued by chronic overproduction, normal five-year depreciation would more closely resemble our Lexus example and be $89,593.
Instead, overproduction created an additional $94,431 in excess depreciation. When that excess depreciation is combined with the massive $114,063 overpayment to the dealer, the total reaches $208,494 in excess depreciation and overpayment.
Regardless of wealth, most buyers are one and done after that experience. The top 2% of the wealthiest households who can afford this lifestyle didn’t accumulate their wealth by being careless, and they simply find this offensive.
Not every motorhome buyer overpays by this magnitude, but enough do that the market has declined 57% over the last 45 years. The industry is clearly driving more customers away than it is creating repeat buyers.
I am consistently shocked by the prices motorhome owners paid at other dealerships when they come to National Indoor RV Centers to trade in their coaches. Far too many paid prices much closer to MSRP than they did to invoice.
This leads to the core question:
If a manufacturer earns no additional profit beyond what the dealer pays them, why do manufacturers create such extreme markups from invoice to MSRP? Why require dealers to advertise at MSRP? Why provide dealers cover to charge up to 58% over their cost? Why create smoke and mirrors that confuse or mislead the customer?
How does this build trust?
How does this encourage repeat business?
And, in turn, how does this grow the motorhome industry?
Let’s compare the motorhome buying experience for two first-time buyers: one who finances and one who pays cash. Both enter the process unaware of what they don’t know and are relying heavily on their past automobile-buying experiences.
The buyer who finances their first motorhome has built-in protections against unknowingly paying far too much. The purchase price is generally constrained by the size of the down payment, the monthly payment as a percentage of their income, and the lender’s underwriting guidelines.
Most primary lenders will not finance more than 20% over invoice on a new motorhome, including tax, title, and license.
While both buyers are unaware of the massive markups relative to automobiles, the all-cash buyer has none of these protections.
What Is Over Allowance? “A Real Slick Operation”
While both buyers are unaware of the massive markups relative to automobiles, the all-cash buyer has none of these protections. Down payment and monthly payment limits are irrelevant to them, and there is no lender capping the selling price at invoice plus 20% in the down payment.
As a result, the unsophisticated first-time cash buyer can—and often does—pay 40% to as much as 60% over invoice.
Again, why the large markup from invoice to MSRP?
The answer I have always been given is that these massive markups are necessary so dealers have room to overallow.
What is overallowance?
I think the best way I can illustrate this is with some satirical humor and a parody one of my attorneys mailed to me back in the 1980s during the Texas oil bust.
“Good afternoon, Brett. I don’t know if you’ll be interested in this, but I thought I would mention it because I think it could be a real sleeper in making a lot of money with a small investment of $50,000.
A group of us are considering investing in a large cat ranch near Hermosillo, Mexico. It is our purpose to start rather small with about one million cats. Each cat averages about twelve kittens per year. Skins can be sold for about twenty cents for the white ones and up to forty cents for the black ones. This will give us twelve million cat skins per year to sell at an average price of around thirty-two cents, making our gross revenues about four million dollars a year. This averages out to about $11,000 a day, including Sundays and holidays.
A good Mexican cat man can skin about fifty cats each day at a wage of $3.15 per day. It will take 663 men to operate the ranch, so the net profit would be over $9,200 per day. Your $50,000 investment would be recovered in 5.4 days, which sure beats the stock market.
Now, the cats would be fed on rats exclusively. Rats multiply four times as fast as cats. We would start a rat ranch adjacent to the cat farm. If we start with one million rats, we will have four rats per cat per day. The rats will be fed on the carcasses of the cats we skin. This will give each rat a quarter of a cat. The business will be self-supporting and really automatic throughout. The cats will eat the rats, and the rats will eat the cats, and we get the skins.
As you can see, the business will be a real slick operation.
As you can imagine, we are rather choosy about whom we want to get into this new skinning operation, but we are reserving a very attractive engraved certificate for you.
Best wishes. O.U. Kidder”
Overallowance is the embodiment of smoke and mirrors. Rather than being transparent and showing the customer the true market value of their trade, a dealer will overallow in an effort to close the sale. The dealer inflates the value of the trade, showing the customer a number far higher than its actual market value. This preys on the customer’s emotions in two ways. First, no one is more proud of their motorhome than the person who owns it. Second, it makes the owner feel better because they believe they are losing less money on the trade than they expected.
It is smoke and mirrors because the amount a dealer overvalues the trade is simply added to the purchase price of the new motorhome. That is why large markups from invoice to MSRP are required—to conceal the overallowance, or more accurately, the massive overpayment on the buyer’s first motorhome. As a result, the customer never truly knows what they paid for the new motorhome or the real market value of the motorhome they traded.
After one or possibly two purchases and trades, the customer has rolled forward so much negative equity they are either unable to sell their motorhome because they owe far more than it is worth, or, if they paid cash to cover the difference, they are so disgusted they exit the lifestyle altogether. In both cases, they are never buying another motorhome. They are not repeat buyers or customers for life.
Just like the cats eat the rats and the rats eat the cats, overproduction creates overallowance. Overallowance camouflages overproduction. And the large markups from invoice to MSRP—well, they are the grease that enables both. It’s a real slick operation… for a while.
Here’s why the argument that large markups from invoice to MSRP are needed to enable the smoke and mirrors of overallowance doesn’t hold any water for me. The entire charade presupposes the banks who finance these motorhomes are dumb. That’s simply not the case.
The most any lender will allow a dealer to overallow is 20% of wholesale book value. Think about that for a minute. The wholesale book value of the 2021 Entegra Anthem was $234,700, or 40% of its original MSRP of $583,380. The 20% cap on overallowance set by the banks is $46,940, or just 12.4% of the invoice.
I want to make three points here.
First, since banks limit overallowance to 20% of wholesale book value, there is no financial justification whatsoever for the 40% to 60% markups from invoice to MSRP that dominate the motorhome industry. These excessive markups exist only to enable overproduction, allow dealers to prey on and gouge new entrants, and deceive customers through smoke-and-mirrors tactics.
The automobile industry solved this long ago with markups of roughly 5% to 8% for mass-market vehicles, 7% to 10% for mid-luxury, and 8% to 12% for premium luxury. Does that 12% for premium luxury automobiles sound familiar? It should. We just calculated the bank-imposed overallowance limit of 20% of wholesale book value for the 2021 Entegra Anthem to be 12.4% of its original invoice. Twelve-point-four percent is right in line with premium luxury automobile markups and clearly offers no financial support for the Entegra Anthem’s 58% markup.
Second, if you are financing the purchase of a new motorhome, banks provide meaningful protection by capping a dealer’s selling price at 20% over invoice, including tax, title, and license, plus the down payment, and limiting overallowance on a trade to 20% of wholesale book value.
But what if you are a cash buyer? This is not a small group. In 2025, 57% of our new motorhome buyers and 39% of our used buyers paid cash. This is not surprising, as motorhome buyers largely come from the top 2% of the wealthiest households in the United States. These cash buyers are not sensitive to interest rates and represent the most stable source of demand through economic cycles. These buyers did not accumulate their wealth by making repeated poor financial decisions.
Yet, as an industry, we choose to trick and deceive them with smoke and mirrors. Unlike financed buyers, cash buyers have no bank-imposed guardrails. They vote with their feet. They are one and done when they discover—and they always do discover—how they were treated.
We see this regularly. Customers who bought their first coach from another dealer come to us to trade and purchase their second. Their excitement often turns to anger when they realize how badly they were taken advantage of on their first purchase. Many ask to consign, or they are so disgusted they sell their coach to us for cash on the spot and leave the lifestyle altogether.
When you combine the magnitude of overpayment made possible by massive markups with first five-year depreciation that is more than double what it should be, it becomes clear why so many buyers are one and done.
Some dealers dismiss this by claiming that so-called “100-pounders” or “500-pounders” do not happen often enough to matter. That argument does not hold water. For clarity, a 100-pounder is RV industry slang that turns my stomach for a $100,000 dealer profit, extending up to 500-pounders on $1.5 million or higher-dollar motorhomes. RV salespeople are typically paid 25% to 30% of the gross profit as a commission. Because they only eat what they kill, they are highly motivated to push first-time buyers as close to MSRP as possible.
How often does this need to happen to matter?
Why “100-Pounders” Matter
If only one out of every ten first-time motorhome buyers pays an additional $100,000 because of smoke-and-mirrors pricing, that alone would be enough to create thousands of customers who never buy another motorhome.
The industry simply cannot afford that.
Motorhomes are not impulse purchases. They are discretionary luxury products. Repeat customers are the lifeblood of long-term growth, and every buyer who leaves the lifestyle because they feel deceived becomes someone who not only never purchases again but often discourages friends and family from entering the market.
I believe there is a far better approach.
Instead of relying on inflated MSRPs, overallowance, and confusing negotiations, the industry should move toward transparent pricing much like the automobile industry has done over the past several decades. Customers should know what a motorhome costs, what a fair margin is, and what their trade is actually worth. Transparency builds trust. Trust creates repeat customers. Repeat customers build long-term businesses.
The irony is that National Indoor RV Centers has proven this model works. We have operated as a high-volume, low-margin dealer because our objective has never been to maximize the profit on one transaction. Our objective has always been to earn customers for life.
When customers understand what they are paying and why, they are far more likely to come back. They refer friends. They return for service. They store their coaches with us. They consign with us. They trade with us. The lifetime value of an honest customer relationship is dramatically greater than maximizing the gross profit on a single sale.
The industry often focuses on selling today’s motorhome. I believe it should focus on selling the next ten.
If we reduce excessive depreciation by controlling production, eliminate smoke-and-mirrors pricing, and become radically transparent with customers, I believe motorhomes can return to long-term growth.
The demand is there.
The wealth is there.
The lifestyle is more popular than ever.
The problem is not the customer.
The problem is the economics of how we sell motorhomes.
And economics can be fixed.
Applying Charlie Munger’s Inversion Principle
How often does this need to happen to matter?
For perspective, the difference between the 45-year decline rate of motorhomes at negative 1.86% and the 3.1% growth rate of towables is just 4.96%.
Based on the trades I have seen from first-time buyers, this level of overpayment occurs well above 4.96% of the time. And 45 years of declining motorhome sales is proof.
I want to pause and make one point absolutely clear. National Indoor RV Centers is different in how we compensate our RV Lifestyle Specialists. They are not paid a percentage of gross profit. Every guest is treated exactly the same whether they are purchasing a $75,000 used motorhome or a $2 million new motorhome.
Our RV Lifestyle Specialists are paid a flat $1,000 commission per sale, with volume-based bonuses that begin with the first sale of each month. Their incentive is honesty, service, and long-term relationships—not maximizing the sales price.
If the industry compensated salespeople this way, massive markups would largely disappear.
That is not how the industry operates, which raises a simple question:
Why do manufacturers give dealers cover to gouge customers with massive markups?
When the industry loses one first-time buyer, it likely loses another six potential buyers through word of mouth alone without ever knowing they lost them.
And third, what business or industry would create an incentive and a structure that allows its wealthiest customers—its source of stability in down markets and its most likely repeat buyers—to be gouged, misled, and driven out of the industry?
It truly defies reason.
This is the exact opposite of what drives growth, and 40 years of declining sales have proven it.
That’s why we need to apply Charlie Munger’s Inversion Principle next and how it should be applied by the motorhome industry to bring about the changes that need to be made.
Munger’s Inversion Principle is a mental model used for better decision-making. Instead of asking, “What will make me successful?” Munger suggests asking, “What will guarantee failure?” and then diligently avoiding those actions.
For example, instead of figuring out how to be happy, think about what makes people miserable—addiction, envy, resentment, unreliability, refusing to learn from others, giving up easily, and poor relationships—and then steer clear of those behaviors.
This reversal, or inversion process, clears cognitive fog. It’s easier to identify harmful habits and destructive paths than it is to define success in precise terms. By removing what doesn’t work, what remains is more likely to lead to success.
Munger’s principle also improves clarity in problem solving. In business, rather than asking only how an investment can succeed, ask, “How could this fail?” Then systematically eliminate those risks.
Munger used inversion frequently in investing, ensuring that he and Warren Buffett avoided common errors rather than chasing every potential opportunity.
Inversion works because humans are prone to biases, overconfidence, wishful thinking, and narrow framing. By thinking in terms of the opposite, we confront assumptions, broaden our perspective, and shift our focus from idealistic outcomes to realistic obstacles.
Ultimately, Munger’s principle of inversion is about avoiding stupidity before seeking brilliance. It reminds us that success often comes not from being extraordinary, but from consistently avoiding disaster.
As Munger famously put it “All I want to know is where I am going to die, so I will never go there.”
With inversion in mind, I think we have already created a short list in this video of what has been guaranteeing failure in the motorhome industry for the past 40 years.
In fact, the list is only two items:
Eliminate the massive markups and the deceit they create.
Avoid overproduction at all costs.
Brett’s Predictions and Closing Remarks
In my heart of hearts, do I believe the motorhome industry will join the ranks of buggy whip companies or Blockbuster Video over the next decade or two?
I do not.
That belief is not rooted in any faith I have in the RV industry, but in my faith in the capitalist society and free enterprise.
As I have outlined earlier, the lifestyle is too popular, the pool of potential buyers is too large, and spending on vacations and travel continues to grow at record rates. Markets, when allowed to function, generally get things right.
I believe a manufacturer—or even an investor—will step forward and apply inversion thinking, approaching the market in a way that allows them to take market share, grow profitably, and meaningfully reduce depreciation and the overall cost of ownership for the consumer.
Someone will return to the first principles of supply and demand and exercise discipline in production so demand consistently exceeds supply, eliminating the hidden evil of overproduction.
It is my hope they will also eliminate the deceit created by massive markups and, in so doing, eliminate the abuse of customers.
I suspect we will begin to see the seeds of this change sooner rather than later.
If you’re still awake, thank you for taking this much time out of your life to listen to my musings.
I wish you all safe travels and only the best.
Thank you again for watching.