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USA seller’s market: are we reaching Peak Cherokee

While this broker is typically associated with PCA (peak condition aircraft), I was impressed by the asking price for a Cherokee 140 ($119.5k) Not a particularly refreshed airframe but it does have a 30 SFRM engine, it doesn’t even have complete logs! but it does score two accidents! one a mid air…

example

example

example

…and this relatively unremarkable Warrior sold in one day for $119k, also with a fresh overhaul engine. It also has accident form see below.

example

NTSB

Oxford (EGTK)

Prices are soaring… maybe a combination of

  • astronomically high new aircraft (400k for a Piper trainer, 1.x Mill for Cirrus) prices vs. revolutionary avionics that can easily be used to upgrade older airplanes (e.g. a 50 year old Pa28 with G5, GFC500). It will do the same but for less than half the price
  • asset inflation as seen in real estate and other areas (people are going away from cash)
  • legacy airplane numbers diminishing (fewer good condition planes avail.)
Last Edited by Snoopy at 24 Apr 22:11
Airline/Mentor/Safety/Instructor - Pilot
Based Austria | Operating Worldwide

Given that you’re showing US market planes, I’ll comment with that in mind: US market aircraft values in this class were flat or decreasing in real terms for about 20 years. The possibly of buying interesting hardware for peanuts is one of the things that attracted me to buying aircraft in that period, and not too long ago you could buy a nice Cherokee or similar in the US for the price of two decent motorcycles. Now we are entering an inflationary period, many people are grabbing up what they can for the future before menacing regulatory and tax nonsense comes their way and kills their income, and the competition for tangible assets is driving everything up in price. Planes are just going along for the ride, starting at low market values relative to the other options for spending money. I’m not sure US prices for really nice examples will go up further, but I’m guessing they may not go down either.

Last Edited by Silvaire at 25 Apr 03:21

Prices for used airplanes in good condition and with updated avionics have been on the rise in Europe too. It’s a slow process but somehow I think they are slowly creeping back to prices which actually reflect their value, particularly in terms of what is there vs investment needed to get a “cheaper” airframe to that state.

2-3 years ago, planes were massively undervalued, many still are today. But it can be seen that numbers of airplanes offered are much smaller too. Some are outright difficult to find (or to find in acceptable condition).

Observations with types I regularly look at for a bit of plane porn, I notice that finding a nice Twin Commanche is very limited in terms of availability. Mooneys used to have a 2-3 page list with low prices starting in the 30k’s for valid airframes, now there is half a page and identical airframes are up in the 60k range.

Cherokees as well have hiked up. I’ve not really paid too much attention to others, but in general, the market is moving towards a sellers market rather than what it’s been for years where buyers could massively underbid asking prices.

I reckon Silvaire has most of the reasons why right… the insane prices of new airframes as well as the number of vaild airframes diminishing.

Well, I’ll take good care of my Mooney…. not only because I am actually likely to start using it again myself. But I guess if tendency continues, it may eventually fetch something akin to a fair price again.

LSZH, Switzerland

Snoopy wrote:

astronomically high new aircraft (400k for a Piper trainer, 1.x Mill for Cirrus) prices vs. revolutionary avionics that can easily be used to upgrade older airplanes (e.g. a 50 year old Pa28 with G5, GFC500). It will do the same but for less than half the price

Historically the cost of an aircraft can be divided in 3 equal parts:

  1. the structure (fuselage, wings etc)
  2. engine
  3. “avionics”, or necessary systems not being part of the structure or the engine

Clearly today this has changed for light GA. We know the prices for engines and avionics, which makes the structure of a new aircraft account for approximately 90% of the aircraft.

I don’t think this is entirely correct though. Let’s look at a 4 seat RV-10. The kit price for the entire structure is $50k. One single skilled builder working full time can at least put together 4 of these each year (or rather 2 skilled persons can put together 8). If he has a salary of $100k, the total for the structure is still only $75k. The cost for Van’s to make that kit is at most $25k, so the real cost of a finished structure of the R-10 is around $50k. I would say this is roughly true for all 4 seat GA aircraft. A Cessna/Piper has considerably more complex structure (more labor needed), so it’s probably twice this. A more modern Diamond and Cirrus is less, maybe around $50k. The material costs are nearly negligible, 5-10%.

This means that disregarding Piper/Cessna due to overly complex structure by today’s standard, the old estimate of 3 equal parts still holds, and why shouldn’t it? Certified aircraft engines and avionics are still low production items. Avionics has evolved a lot, engines not so much. The structure has evolved, at least with Van’s and Diamond where new production methods are incorporated from the start.

Taking the RV-10 further as an example:

  • the structure : $50k
  • engine + systems: $50k
  • avionics : $50k (but the sky is really the only limit here)
  • and let’s add a fudge factor. Merging the above parts and finishing off : $50k

The cost of very capable 4 seat aircraft with an IO540 and full avionics is around $150k-$200k. Why does a Cirrus cost what $800k? Why does a mediocre performance C-172 cost $500k ? IMO it’s just business and the market. The market is way too small to facilitate mass production. $150-$200k is still a considerably amount of money, filtering away most of the potential customers. The ones left though, have no problems paying more, and would rather do so for some “added extra”, even if the added extra is fluff at insane prices The result is that when producing aircraft, it makes much more sense to go for the top end than to reduce costs to sell at the low end. The more complex the aircraft is, the better. The larger the aircraft is, the better. It’s much more lucrative to produce one biz jet each year, than to produce 100 C-172, and one of the main reasons is that you will have a hard time selling 100 C-172s without saturating the market.

Small GA is a niche market. A small passionate company, producing a handful of quality aircraft each year, can make a good living in such a market. To make “big business” you have to sell to the military or the major airlines. The kit industry, the glider industry and the UL industry are all small companies. Refurbishing an old Piper can be done with a one man company, and can be done with a nice little profit because the engine and avionics prices are what they are.

ENVA ENOP ENMO, Norway

Just to put something else into the calculation. A chum has recently bought 2 new engines for his Seneca V total cost round €200,000. List price per engine $93,000.
I am told that 2 new engines for a DA42 comes in at around €160,000 but that I believe is estimated rather than actually purchased.
So I would have thought building an RV-10 would be quite a bit more than $75,000.
I have recently been looking back at some new aircraft prices from some 15 to 20 years and more ago. When crosschecking with aircraft being sold through Planecheck now, it is surprising how many are being sold for around the price that they would have been bought new.
Does that mean zero depreciation?:)) And therefore buying a new aeroplane is not really a bad investment when compared with the amount of enjoyment you can get,

France

LeSving wrote:

I don’t think this is entirely correct though. Let’s look at a 4 seat RV-10. The kit price for the entire structure is $50k. One single skilled builder working full time can at least put together 4 of these each year (or rather 2 skilled persons can put together 8).

So, with my hands full raised as I know very little about this, I am not sure this is correct.

A colleague of mine who is a very well regarded LAA enthusiast as well as inspector is big into his RV’s. Him and his father have been building them for years now, with full ‘amateur’ workshop facilities (I hope that makes sense, excellent facilities in an amateur hangar). There is no way they can turn out 8 a year. He aims for 1 a year, albeit he does have another part time job (his father does not, and is at it full time) and is a perfectionist.

United Kingdom

gallois wrote:

A chum has recently bought 2 new engines for his Seneca V total cost round €200,000. List price per engine $93,000.

Which engines are those? Some Continental I would guess? IO360? A certified Superior IO360 costs $29k, about the same for a certified Lycoming. But this is the whole point. If you can sell an engine to a person at $100k, you obviously would. I would bet the actual cost of producing that engine is somewhere in the range of $10-15k, maybe less. If it’s more, than they have a serious problem, VERY serious problem in their production facilities and processes.

gallois wrote:

So I would have thought building an RV-10 would be quite a bit more than $75,000.

I said 150-200k, with the assumption that it was build from a kit at net cost, and was sold the day it was finished. 150-200k is also incidentally what builders pay in total.

ENVA ENOP ENMO, Norway

TSIO 360 list price as I said $93,000
If you want one that’s what you pay, then on top of that there is transport and dismantling the old engine, fitting the new, adding oil etc. It all mounts up. If you use an aircraft for business you buy new because you can’t afford the down time to overhaul, but you have the money to buy new.

France

@gallois typically you would get an engine overhauled or factory remanufactured. Am estimating this route, including overhaul of accessories and installation is more like €60k a piece.

Not cheap but obviously less.

Oxford (EGTK)
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