The profitability of selling used recreational vehicles seems to outweigh the potential drawbacks, according the latest RVBUSINESS.com Industry Poll.
Respondents cited financing (11%), reconditioning costs (23%) and most notably the ability to procure units in salable condition (52%) as the leading challenges in selling used vehicles.
“The biggest issues are finding good ones at the right price so that adequate reconditioning can be done and you can still make money without tying up your shop for too long,” summarized one retailer.
According to another dealer, private party selling significantly depletes the stock of “cherry” used units available to dealerships. “I think the biggest factor in used is that 80% or more used RVs sold are being sold private party. Our industry needs to figure out a good way of getting more quality trades and consignments.”
But despite the additional variables associated with selling used versus new, most retailers consider the market a viable profit center for their operations.
One dealer noted: “…The downside to pre-owned is that typically we find there are service issues with the unit and the probable reason the owner traded it. We do a pretty thorough job of checking a coach in but you can’t check everything. The upside is that the margins are good and you don’t see them coming back with many problems after the sale. When a new unit is under factory warranty, the consumers’ expectations go way up.”
“On the plus side, return on capital is generally better on used units versus new,” said another dealer. “It also provides a good base of potential new coach buyers down the road. Downside is the added strain on cash flow as cost of trade-in usually exceeds profit on new coach.”
According to participants, one of the key advantages in selling used is that units are generally “one of a kind” and consumers are unable to comparison shop. It also draws in customers hunting a bargain. The majority of poll respondents identified price-conscious buyers (70%) as being the most active demographic in the used market, followed by entry-level buyers (23%).
“Used inventory in this market will always be steady because of the first-time buyers and the customers that won’t take a hit on a new product,” said a retailer.
An indication that the market remains healthy is that most respondents (45%) foresee an increase in used business in 2006 over last year, while 43% said it will remain roughly the same and 12% anticipate a decrease in revenues.
According to a participant who publishes price manuals, pared-down inventories compared to 2005 levels could help boost used sales. “In 2005, high inventory levels pushed prices down for new units, and the resulting deals for new RVs attracted price-conscious consumers that might otherwise have purchased used units,” the respondent said. “If inventories decline significantly this year, I think new-unit prices will go up, and more customers will therefore turn to the used market.”
However, many participants acknowledged that external market variables, such as rising gas prices and interest rates, could also influence sales. 
“At the current time fuel prices and consumer confidence have a negative effect in the selling of used RVs,” said a consultant who deals with consumers. “There are too many units sitting on the street corner with ‘For Sale’ signs in the window.”
Other highlights from the poll include:
• The prime age for used units is 3-years-old (38%) followed by 2-year-old units (18%), five years or older (25%) 4-years-old (17%) and 1-year-old (2%). 
• Not surprisingly, trade-ins (78%) represented the single largest source for procuring used units.
• Travel trailers and Class A motorhomes were identified as generating the highest demand and the most profitability.