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Why do engine prices climb?

bret

Well Known Member
For a rough estimate it looks like the average price of this prop turning thing has gone up 1,000.00 a year for the last 10 years? any economist care to jump in and explain? has inflation been this high or is there another factor at play here?
 
Because they can....
There is almost no competition in the new engine market.
In the used market popular cores limited availability keeps prices up.
So prices are set to maximize profit, not sales.
 
100% agree

Strictly because they can


It really annoys me to watch prices climb every year. Your right on with the 1k.

Its about 1k a year for no good reason.

The engine guys may be making money by doing this but pretty soon no one except the super rich is going to be able to afford a decent engine.

I called company X last week and quote of 4k more then my buddy paid for his engine 2 years ago. Same engine. :rolleyes:

The other thing is fuel.

Our EAA chapter had a presentation by a petroleum engineer on friday night. She had some pretty interesting data. She works for a gasoline manufacture. According to her, leaded av gas could be gone by as early as 2018.

When the switch happens the potential to require a massively expensive top end retrofit with new material for valves and valves seats will occur. Yet another excuse for engine prices to climb


The few diesel engines out on the market in testing right now are extremely complex. Turbos and many many many more computers and parts to take care of. Statistically this will contribute to less reliability. I heard rumors that new diesel engines will be in the high 40k range. Nearly 50k and the excuse of the manufacture is going to be "well you can run Jet A in your plane now for $2.80 a gallon". The whole industry is a debacle and I really think that the changes that are on the near horizon with fuels are going put many of us out of this wonderful hobby financially.

The price of a new lycoming for pre WW2 technology essentially is already out of control. Since when did a lawn mower engine cost as much if not more then my pickup truck? Certified engines i can see but a non certified experimental engine 30k+ ?

why?
Because it can. Its not a commodity. Its a privilege

This is just about the same thing that is happening with hangars. Tons of FBO,s nationwide at larger airports are tearing down T-hangars and not renewing land leases. why? to build corporate hangars that bring in much more revenue. We will be lucky if generations to come even have small piston engine aircraft to train in.


sad........
 
One big factor is lawsuits. Remember you don't have to lose a case to be on the hook for some unreal $$$$

Just about everyone attached to the major parts of these planes gets sued when accidents happen...
 
Three things come to mind when I hear this discussion; quantity and liability.

How many new engines do you think Lycoming, ECI, and Superior sell every year? Call it 5,000 total? Be generous and call it 10,000 engines a year. Profit from those 10,000 engines must support the manufacturing staff, tooling, licensing, paperwork, fixed costs, etc.

Then add to the cost of those dwindling numbers the cost of liability insurance, whether self insured or via Lloyd's of London. Again, that "risk" must be spread over those few engines. As an industry, if their liability insurance is $10,000,000/yr, that comes out $1,000 per engine.

One other thing, ECI was just purchased by Continental. Superior was also recently (last few years) acquired by another company as well. Both of the new owners of these two companies will raise prices to cover the cost of their acquisitions.

It is kind of the perfect storm; reduced manufacturing quantity, insurance liability, and debt load.
 
They probably have to increase prices so they can stay in business. Lycoming is so small they don't have a line item in the Textron annual report. This unit would have to compete for funds to maintain and develop. They must develop just to stay even. In a conglomerate, the runt of the litter does not last long. Always fighting. If it was such a high margin business, the competition would be growing fast. In the last downturn, they were just about the only source of a new engine.
 
For a rough estimate it looks like the average price of this prop turning thing has gone up 1,000.00 a year for the last 10 years? any economist care to jump in and explain? has inflation been this high or is there another factor at play here?

On a $25k engine, $1k per year is only 4%. Although overall inflation has been a bit lower than average over the last few years, I'm not surprised at $1k.
 
Three things come to mind when I hear this discussion; quantity and liability.

How many new engines do you think Lycoming, ECI, and Superior sell every year? Call it 5,000 total? Be generous and call it 10,000 engines a year. Profit from those 10,000 engines must support the manufacturing staff, tooling, licensing, paperwork, fixed costs, etc.

Then add to the cost of those dwindling numbers the cost of liability insurance, whether self insured or via Lloyd's of London. Again, that "risk" must be spread over those few engines. As an industry, if their liability insurance is $10,000,000/yr, that comes out $1,000 per engine.

One other thing, ECI was just purchased by Continental. Superior was also recently (last few years) acquired by another company as well. Both of the new owners of these two companies will raise prices to cover the cost of their acquisitions.

It is kind of the perfect storm; reduced manufacturing quantity, insurance liability, and debt load.


You make a good point but how do you explain the cost of a $22k engine over haul?
 
I am thinking of building my own at this rate. but then again, I am seeing just the parts alone skyrocketing also........
 
Engines&Cost

Vans offer the best price for Factory new with prop added on.Rebuilding a core engine is only marginally less expensive if done to new engine specs.The cost of overhauling core components,mandatory new replacement parts,as well as new cylinders saves you 20% off of new price,now add in the time value,technology advancements,roller tappets,fuel injection,electronic ignition.The savings Vs time value,rolling my own 1965 0-360A1D WD to New specs has added years to the project. I've received a whole new level of education on Lycoming engines I never anticipated but have lost out on flying time, my choice.Point is Time value vs Money. IMHO
RHill
 
My Favorite part of Vans website

Rather misleading to potential new builders.

In regards to putting a lycoming on your plane.


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I would sure love to know where all these good used lycomings are for $8k. Maybe i should call vans and ask them to point me to some?
Last i checked you can't buy a run out core for less then 10k.
I know most will say thats an old quote and that would be true but i don't think its old enough to justify nearly 3 times the cost of what vans has printed on the site.
 
Overhaul that engine!!

Overhauled my engine last year (O360-A4M for about $19K in parts) it raised the Vref on my airplane about $10K. I wish I could do that every year.
I'm makin money now!!
John
 
I would sure love to know where all these good used lycomings are for $8k. Maybe i should call vans and ask them to point me to some?
Last i checked you can't buy a run out core for less then 10k.
I know most will say thats an old quote and that would be true but i don't think its old enough to justify nearly 3 times the cost of what vans has printed on the site.

I think a little research will show that this statement was made in the 1980s. At that point in time, the $8K price was in line.

In 1992, I paid $3.5K for a first run O-320. I put it on my RV-6 and flew it for 3 years before overhauling it @2800 hrs. Even then every part I removed was well within serviceable specs.
 
I think a little research will show that this statement was made in the 1980s. At that point in time, the $8K price was in line.

In 1992, I paid $3.5K for a first run O-320. I put it on my RV-6 and flew it for 3 years before overhauling it @2800 hrs. Even then every part I removed was well within serviceable specs.

If it were made in the 80,s which is probably pretty accurate with the cost of inflation from the 80,s we should be about 16-19k for a engine I think

Not 30k range

So it certainly can not just be attributed to inflation. Must be like others have said with liability etc
 
If it were made in the 80,s which is probably pretty accurate with the cost of inflation from the 80,s we should be about 16-19k for a engine I think

Not 30k range

So it certainly can not just be attributed to inflation. Must be like others have said with liability etc

$8k was for a mid time used engine, circa 2000. At that time, new 4 cylinder engines were in the mid to upper teens, IIRC. At 3% inflation over 15 years, those $17.5k engines are in the mid- upper $20k region now.
 
Running engines are available as removed from damaged aircraft in the $8,000-$10,000 range. One just needs to do thier due diligence and personally inspect the core and logs....and buy from a reputable parts dealer or someone who is trustworthy. I disassembled and inspected a parallel valve IO-360 last winter that was bought for $8000. It was removed from a wind damaged aircraft and it turned out to be in great condition.
 
$8k was for a mid time used engine, circa 2000. At that time, new 4 cylinder engines were in the mid to upper teens, IIRC. At 3% inflation over 15 years, those $17.5k engines are in the mid- upper $20k region now.

You must be using the same math for this as you used above to explain how an engine rebuild cost $22k

You forgot with that retailers are also making profit on your 12k of parts as you stated above.

Just an FYI A commutative rate of inflation of 38.2% with a 15k new engine makes an engine today cost 20.7k and change not 29-32
 
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The only real alternative today is some of the new diesel technology, which is coming out at the $60k-$80k price point. There is no economic incentive for Lycoming and Continental to keep their prices down. If you don't like it, what choice do you have?
 
Costs to manufacture anything goes up each year.

Consider that the cost of labor is maybe a third, materials I'd guess 10-25%, outside subcontracted processes maybe 10% (or equivalent if done all in house. Then there is overhead - rent (or property taxes), electricity, water, gas, etc. Each of those goes up each year. Lately labor costs probably stagnate as wages have but when was the last time you heard of electricity going down or local taxes. And in labor its not just wages - what about that little thing called benefits, e.g. health insurance. Care to guess its trajectory? Some costs are fixed - as in rent or property taxes - they get allocated over the volume produced - produced more individual cost load less, fewer - more, etc. Think volumes are growing in last few years, I doubt it.

Last cost item is profit - which consumers hate to hear about until the company ceases to exist because it didn't make one.

Such is basic economics - something our political leaders often know nothing about.

So prices go up unless unit costs come down. Free lunches only exist in minds of DC pols. Thus endeth the lesson.
 
The only real alternative today is some of the new diesel technology, which is coming out at the $60k-$80k price point. There is no economic incentive for Lycoming and Continental to keep their prices down. If you don't like it, what choice do you have?

Bingo was his nameooo
 
Why

For a rough estimate it looks like the average price of this prop turning thing has gone up 1,000.00 a year for the last 10 years? any economist care to jump in and explain? has inflation been this high or is there another factor at play here?

Textron which owns Lycoming and many other brands (including one I represent overseas) adjust their prices 3 to 5 % annually.

As a reference only: a 1997 Cessna 172S use to cost factory new delivery/ basic price $124,500. Move forward to 2015 and the same aircraft (newer avionics) cost $364,000. Reasons? Inflation is #1. Cost and availability of materials #2, believe or not TORT is #3 and Labor cost #4
 
Textron which owns Lycoming and many other brands (including one I represent overseas) adjust their prices 3 to 5 % annually.

As a reference only: a 1997 Cessna 172S use to cost factory new delivery/ basic price $124,500. Move forward to 2015 and the same aircraft (newer avionics) cost $364,000. Reasons? Inflation is #1. Cost and availability of materials #2, believe or not TORT is #3 and Labor cost #4

I was just having this exact conversation the other day.
Just plane silly! All pun intended

I wonder how much of this is attributed to avionics.

The 172 has not changed much in a long time. Other then avionics i find it hard to believe cessna's cost has more then doubled for a 172.

I think cessna is going to have a real winner with the new 182 diesel but at a cost of $569k i don't know who they think they are going to sell it to.

One might argue its not exactly a fun airplane to fly (like an rv) but surly a capable one with a diverse mission profile.
 
Outside the box

You might be better off finding a used plane, that happens to have an engine, than finding a used engine. Look at the twins for a double whammy! Yeah, Whammy, you stay classy San Diego;)
 
You must be using the same math for this as you used above to explain how an engine rebuild cost $22k

You forgot with that retailers are also making profit on your 12k of parts as you stated above.

Just an FYI A commutative rate of inflation of 38.2% with a 15k new engine makes an engine today cost 20.7k and change not 29-32

Good Lord.

My post specified $17.5k for a new engine back then (which was when I was looking at engine options for my airplane). Doing the math, 3% compounded annually for 15 years is 55%, which applied to a $17.5k engine inflates to ~$27k today. That is in the ballpark for pricing on a new parallel valve 4 cylinder engine (fixed pitch) from Van's today.

As to rebuild costs, I rebuilt the engine on my airplane (from a core), and have first hand knowledge on what goes into a rebuild. I have another project underway and have run the numbers on all of the engine combinations and permutations (new, core, commercially rebuilt, or DIY rebuilt) for that project. The figures I posted reflect a current not to exceed quote (given a re-usable case and crank) from a well known shop with a good reputation.
 
You don't need to go to many Saturday fly-ins before you hear stories about engine deals gone bad.If you roll your own,educate yourself before you part with your cash.There are four levels of Lycoming engines 1.)Re-manufactured, can only be done by Lycoming and is done at the Factory to new specifications and comes with a new data plate&zero time log book. 2.) Field Overhauled to new Specifications retains most original parts and data plate&logs. 3)Overhauled to tolerance(this is a mostly worn out motor that meets the minimum specifications allowed by the table of limits&FAA).4) The core,that always has a story to go with it:rolleyes: Like airplanes,engines come in two flavors 1.Before Prop strike 2.After prop strike and of course the crank has been checked and is said to be straight.Unless its been sent to Tulsa and has an 8130-3 that says so,it isn't,more then likely it has a crack behind the oil slinger and that's $4 grand for a good crank with 8130-3.Pig in a poke doesn't begin to describe what can happen.On the other hand you could buy a great motor with just a few hours from new for penny's on the dollar.I'm told it has happened,just not to me!
 
The 182 Diesel they delayed, delayed, delayed, and then cancelled 6 months ago?

Sorry I'm out of date. I saw a flying version of it once at an aviation expo. Looked promising.
I guess your right. Was canceled. Some turbo problem I guess
 
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What I'd like to know is why there is such an astronomical price difference between a new 360 and a 540. I mean.... really.... does 2 extra cyls, rods, crank throws etc, etc, merit a $15-20K price difference? Or am I missing something here? IMO, the market is ripe for someone to step in and produce 540s at a reasonable rate. As someone who has extensive machining/manufacturing/cnc programming experience, the extreme price difference boggles my mind. It's got to be strictly a supply/demand issue.
 
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