Help with understanding used SMB pricing

[Belize]

Sorry if this is a double posting. Posted earlier but didn't go up.


I am trying to rationalize the pricing I have been seeing for the last 4 months for 2006-2007 diesel 6.0 SMBs. Maybe you long timers can see where my calculations are off or explain why the van is worth the markup from “mechanical” value.

Assuming a 2006 van in excellent condition (solid engine and tranny) with say 100k miles, bullet proofed 2 years ago. To simplify, I am also assuming depreciation (normal wear and tear?) of 5%/year for all systems and blue book value on the base van. So below is:

Original Value - Depreciation (5% x Original value x years) = Depreciated Value

Assuming a 2006 van in excellent condition (solid engine and tranny) with say 100k miles, bullet proofed 2 years ago:

Blue Book Value: $6k
Bullet proofed: $16k - $1.6k (5% x $16k x 2) = $14.4k
4x4 value: $12.5 - $8.125k (5% x $12.5 x 13) = $4.375k
Pop Top value: $12.5k - $8.125k = $4.375k
Front/Rear Lockers: $4.5k - $2.925k = $1.575k
Warn Winch: $2k - $1.3k = $700
Air compressor: $1.6 - $1.04 = $560
Rear and Front Aluminess Bumpers: $7k - $4.55k = $2.45k
Side Ladder: $830 - $539 = $290
Roof Rack: $3k - $1.950k = $1.05k
Awning - $1.5k - $975 = $525
SMB Build Value (plus extras): $35k - $22.75k = $12.25k

2006 new value: $102.43k
2019 Depreciated value: $48.55k
2019 Asking Price: $65K - $80K

Where is this calculation off? And if not off, is the extra $20k-$30k a “luxury tax”, or a “market tax” or just what they are intrinsically worth?

Thanks!

[Grampswrx]

It's a market tax. There are so few for sale at any given time that you can never really compare them. Plus there is a big difference in features, use, location etc. So people ask what they want. The good deals sell quickly and the over priced ones sit.

The other problem with your depreciation calcs is that you can't actually buy any of those used items at the prices you are quoting. For example, you can't buy a used 4x4 system for $4400. You could buy a wrecked 4x4 van for that price and then swap everything over, but then with your labor you will be in it way more than $4400. So your only choice is a DIY Ujoint kit or to have a 4x4 shop do it. So you are looking at $10k on the low end to $20k on the high end to add 4x4.

Next, aluminess products hold their value better than you list. A front bumper is $2500 new and routinely sell for $1500 used. Same with a rear bumper or a roofrack. So your $7k aluminess spend is about $4-5k on the used market, if you can even find them.

What it comes down to is that the cost to build out a van is roughly equivalent to what the asking prices are on 4x4 vans. You are doing this backwards. Instead of trying to depreciate your way to a sane price, you should price out the cost, labor and time of building a $6k van into a full SMB 4x4. You will spend more than a year and at least $50k to take a stock 6.0 2wd van to a 4x4, bumpered, pop top, interior built out van even if you found everything used.

Plus, you aren't going to find everything in one place. You'll find bumpers in Portland, a 4x4 axle in your town, a pop top in texas and have to go to colorado for an interior build out. Or something like that. Most people value their time more than that and just pay the asking price.

Instead of fighting it, you need to decide if you can either afford to pay $75k for a van now or wait 2-5 years to find what you want at a cheaper price. Some want adventure now and some are willing to wait. But the prices will never make "sense."

[eddyturn]

Wow, yeah, you can't just NADA a 4x4 van and expect to get anywhere close on price. Mine was new in January 09 for $108k and with only 57k miles now, I suspect I might get 75-80k as it's a 6.0L with some bulletproofing. You can do the depreciation thing on a used car or truck but that won't really fly on a good, clean used van and the owners tend to know that. The vans are getting more rare since they aren't made anymore.

[Steve C]

Originally Posted by Grampswrx

It's a market tax.

Instead of fighting it, you need to decide if you can either afford to pay $75k for a van now or wait 2-5 years to find what you want at a cheaper price. Some want adventure now and some are willing to wait. But the prices will never make "sense."

I think Gramps pretty much nailed it with his post... These things are relatively rare, expensive to build and keep their value with a vengeance... If you want to buy one ready to go, it will probably be painfully expensive...

[BrianW]

All these long-worded answers can be summed up in three words:

Supply and demand.

Demand significantly outstrips supply, so prices are silly.

[ShuttlePilot]

Belize, to answer your question with the options you offered. D) it's what they are intrinsically worth.

Originally Posted by BrianW

All these long-worded answers can be summed up in three words:

Supply and demand.

Demand significantly outstrips supply, so prices are silly.

I agree with this and I would also add, in my opinion, because of the current mile post of the economic cycle there are a lot of folks able to hand over 65k, 75k, or 100k dollars at the moment for an "overlanding" vehicle. It seemed like it was a lot different market when I bought my used van before #VANLIFE happened and the economy was very different. An example of this is, back then (2010) everywhere I went, by far, most people didn't know what it was. Over the last year or two most people will name it as a Sportsmobile and I don't even have any branding on it anymore.

- Eric

[arctictraveller]

Just about anything is only worth what someone is willing to pay for it, and at the current time, 4wd vans are in high demand and plenty of folks are willing to pay what some see as higher prices, but as long as someone is willing to pay that price, that's what that item is worth (at least to that buyer). It's easy to say prices are too high, but it's not hard to survey the market and get an average price for a van with the features you want. If prices are above your budget you can either reduce your list of desires, (eliminate 4wd, higher miles, no interior build, less desirable engine etc) build your own, (assuming you have the ability and desire) or wait until the deal of a lifetime comes along. Unfortunately, that deal may be a long time coming, but they do happen. Best of luck in your search.

[mikracer]

In most cases, aftermarket add ons do depreciate about 50% on the secondary/tertiary market. In the world we know as #vanlife, this just isn't the case. As mentioned above, certain things just don't get hit with depreciation because of the lack of supply and a huge demand.

For the most part, a 4x4 conversion will still fetch $10k+ years after the conversion has been performed. A van with a pop top will typically sell for about $8-$10k.

Just to give you an idea of how crazy the #vanlife thing is, 5 years ago CCV used to sell their pop tops installed for about $6,000. Fast forward to today and its $12,000+.

[IanF]

I agree with pretty much everything posted. Time = money. In some cases it takes time if you want to snag a deal. For example, the van in my avatar is a bit of a unicorn: E350, extended length, raised roof, diesel. I looked for a van like that starting around 1998. I finally stumbled onto one that looked good and wasn't insanely priced 20 years later. So despite the fact I have no room or time to convert it into an RV (4WD isn't really something I need), I bought it anyway.

But... I still occasionally consider biting the bullet and just ordering a SMB brand new. Yeah, it'll cost a level of magnitude more, but there is a high chance it'll be in my driveway and ready for trips long before I can finish a DIY build with my current work and previous project obligations.

[Vanzila]

Buy / make one now. they will only go up in price..