[MacCool]

Not to take away from those who are deep in the midst of this storm...ie kits-in-progress, LCP, corroded quick-built parts, etc etc etc, but I do wonder what the effect of Van's Aircraft's current financial.."situation".. has on the value of current Van's aircraft that are now flying and those of us who are contemplating buying or selling an already completed airplane. Thoughts?

 

[bkervaski]

Prediction: The values will go UP once kit prices are adjusted and the smoke clears.

 

[planenutz]

The market will decide for itself over time but all things considered at this early stage of the game - I see values going up. A nice tidy flying RV has just increased in price by 10% overnight.

 

[SMRacer]

JMO

I'm in the process of renewing my insurance, and thus trying to decide what to do with hull value.

So my thinking is that if Van's were to disappear (not likely) my flying aircraft would depreciate due to lack of support and parts availability.

But, if they survive, our flying aircraft will appreciate nicely due to the increased cost of building.

 

[Ironflight]

So my thinking is that if Van's were to disappear (not likely) my flying aircraft would depreciate due to lack of support and parts availability.

I’m no financial expert, but the value of Staggerwings, DGA’s, and P-51’s doesn’t seem to be hurt too much by the lack of factory support or new production…..

I have no idea what’s going to happen to the values of airplanes or kits, and probably no one else does at this point - markets are odd that way.

 

[PhatRV]

I didn't build my RV8 to make money.

 

[airguy]

Anybody attesting to the 51% rule and claiming "education and entertainment" had better say the same thing - but many of us clearly do have plans or intent on eventually selling the airplane.

 

[Ed_Wischmeyer]

RVs have a strong market presence and the demand for support should continue strong, so RVs should not become orphans.

Compare to the GlaStars with a smaller market share and the company sold and moved to China. Yes, there are promises of continued support.

I don’t know the effect on GlaStar prices, but it’s an interesting point of reference.

Granted there are many differences, but it’s also interesting how the Sportsman 2+2 matches up to the RV-15 in terms of performance.

 

[Desert Rat]

I've been pondering the same thing, largely because I'm wondering how this will play out as it relates to hull value and insurance premiums. One data point might be to look back to the Cessna piston restart in 1996.

When the piston single restart happened a new R model cost about $100k. Almost immediately the value of the older ones shot up. In 1995 you could buy a pretty nice P model for around $40k. By 1997 those same airplanes were selling for around $70k

I realize it's not an apples to apples comparison, and I'm certainly not trying to minimize what's going on here, but it is interesting to see how humans perceive the value of stuff.

 

[jimbom]

My Mooney has doubled in value since Mooney quit making new planes.

 

[Benjamj]

My Mooney has doubled in value since Mooney quit making new planes.

So has the price of gold ( 870/oz in 2008 to ~2000/oz now)

 

[airguy]

We bought a 172R in 2010 for $125k, put $40k into it for an electronic EFIS and panel rebuild, and 1200 hours since then, and just got an offer from a flight school for $220k.

Nothing stays the same.

 

[RV6_flyer]

The value of an RV is in what it will do well. They do a LOT well and there would not be over 11,000 of them flying if they were poor performers. A very intelligent man coined the term "Total Performance" for a description of the RV aircraft.

Other than the design, nothing about an RV is secret. Any good A&P with sheet metal experience could make just about any part to repair a damaged RV.

With all the fancy CAD / manufacturing, people have forget about building airplanes like the T-18, Mustang II, RV-3, RV-4, and RV-6. How many Warbirds have been repaired to better than new with local fabricated parts?

For 50-years, Van's Aircraft has been a low profit operation selling with small profit margins. The low cost of buying parts from Van's has kept the value of RVs lower than they should have been.

The value / worth of an RV is the quality of the design, the quality of the build, the worth of the dependable Lycoming engine and Hartzell prop.

The only thing about my RV-6 that I do not like is the fact that I did not start building it years sooner. IF I did not have a flying RV, I would want one.

 

[spatsch]

The value of an RV is in what it will do well. They do a LOT well and there would not be over 11,000 of them flying if they were poor performers. A very intelligent man coined the term "Total Performance" for a description of the RV aircraft.

Other than the design, nothing about an RV is secret. Any good A&P with sheet metal experience could make just about any part to repair a damaged RV.

With all the fancy CAD / manufacturing, people have forget about building airplanes like the T-18, Mustang II, RV-3, RV-4, and RV-6. How many Warbirds have been repaired to better than new with local fabricated parts?

For 50-years, Van's Aircraft has been a low profit operation selling with small profit margins. The low cost of buying parts from Van's has kept the value of RVs lower than they should have been.

The value / worth of an RV is the quality of the design, the quality of the build, the worth of the dependable Lycoming engine and Hartzell prop.

The only thing about my RV-6 that I do not like is the fact that I did not start building it years sooner. IF I did not have a flying RV, I would want one.

First I think prices will go up as RV's are great airplanes which is a fact that didn't change because Vans is in chapter 11.

However, on the spare parts discussion its a cost issue not a can it be done issue. Of course it can be done (working on one now) but if you had to pay even an average A&P to make a part at current A&P hourly rates you are likely 10x more than what Van's sells spare parts for.

In fact if you used fancy CAD with an on demand manufacturer like XOMETRY many parts will be cheaper then your A&P doing it by hand. Unfortunately the CAD plans are not available.

Also newer RV models use some parts tempered after forming. Most builders or A&Ps can't do that in their shop and finding a shop to do it for you is not cheap.

So with money everything can be done but that locks out a lot of potential buyers.

On the other hand I think Van's will survive and spare parts will still be cheap even if they go up by 2X.

Thx

Oliver

 

[jimbom]

So has the price of gold ( 870/oz in 2008 to ~2000/oz now)

Mooney stopped production (Acclaim Ultra) ~2019

 

[rph142]

Price is what you pay, value is what you get. Assets that increase in price faster than inflation have strong value. With savings account interest rates at 5% it’s hard to see an airplane providing good value going forward. The value will stay the same while the price will go up. But the price of everything is going up and our cash is compounding at a minimum of 5%. Planes and houses and most capital assets were good value when rates were rock bottom. That might not hold true with rising rates. I’m an engineer not an economist, but I did pay attention when they were talking about supply side economics in econ class.

 

[lyosha]

Negative PR will decrease the price of non-scarce products relative to general market.

 

[Tim 8-A]

I'll give you a flyers perspective, I just bought my 4th RV yesterday, Ive owned 2 8a and the is my second 10. I love the experimentals because they preform well have the same quality as certified, much cheaper to maintain and upgrade. My first 8a I flew for 400 hours upgraded the panel twice Repainted it and made considerable money when I sold it. My first 10 Flew it for 500 hours ugraded the insterior new panel had fun with it for 10 years and almost doubled my money when I sold it. My second 8a made changes to the panel sold the exisitng eq. to cover the cost of the new, still flying this one. I feel very cofident that the day I put it on the market it will sell, anyone looking for one has a handfull of 8a to choose from. When I was considering going to the Cirrus before purchasing this 10 I had over 150 to choose from. In all the changes and upgrades I made I maybe had to buy parts from Vans 1 or 2 times. Once the airframe is complete there is no upgrading, the upgrades come from third party companies. In my opinion IF anything the values will go up.

 

[lr172]

I've been pondering the same thing, largely because I'm wondering how this will play out as it relates to hull value and insurance premiums. One data point might be to look back to the Cessna piston restart in 1996.

When the piston single restart happened a new R model cost about $100k. Almost immediately the value of the older ones shot up. In 1995 you could buy a pretty nice P model for around $40k. By 1997 those same airplanes were selling for around $70k

I realize it's not an apples to apples comparison, and I'm certainly not trying to minimize what's going on here, but it is interesting to see how humans perceive the value of stuff.

In a very general way, used value maintains a relationship with new value, so as inflationary forces raise new value, used value tends to follow in a related path. That said, MANY other factors influence the the value of a specific product. As long as Vans comes out ok at the end of this, I doubt much changes in used valuation. Yes, higher kit prices bouy used prices AFTER they find there way to the used market, but once the covid bubble of 1000's of RVs hits the market, that also over boosts supply and will create a value drop unless a similar number of interested buyers also appear in the market. You will see this effect in the next year or two on used kit prices. The other day I saw a guys post where he openly admits he is charging a premium over new for his kit (bubble behavior). We know that some meaningful %age of kits don't get completed. Given the very large bubble of kit orders in the last three years, we can assume a large bubble in used/started kit sales in the not too distant future. Unfortunately that bubble drained the market of kit buyers and therefore a sizable price depression in used kit prices seems likely due to an imbalance of supply and demand.

The value of a used product is ALL about supply and demand. We saw in covid that used car values ballooned about 50%+ overnight and as soon as folks could buy new cars again, it went right back to where it was before covid. Pretty normal market behavior.

I would not be worried about any of what is discussed here when it comes to used value. Instead I would be worried about whether or not you will maintain the 50-75% increase seen in the used RV market over the last three years. It is my belief that a portion of this increase is due to increased acceptance or desire for EAB aircraft in the owner community ( a lasting force) and some portion is the covid bubble (a transitory force). We see this bubble behavior in boats, RV's, classic cars and all sorts of luxury stuff; These are bubbles and WILL burst. There was no magic event that caused them to be worth 50% more than the previous year; Just a large group of buyers with irrational beliefs (always liked Greenspan's depiction of the stock market bubble that eventually burst in '01 - "irrational exuberance"). I remain convinced that the RV bubble will also burst in the near term. The question is how much of the RV appreciation is from that bubble and how much on increased market acceptance. I remain convinced that my RV's value will be less in a year or two and not higher. That said, I remain confident that it will not fall to where it was in '19.

Larry

 

[JonJay]

If you’re worried about the value of an RV, you picked the wrong hobby.
I have been flying my RV for 16 years. It owes me nothing.

 

[lyosha]

I'll give you a flyers perspective, I just bought my 4th RV yesterday, Ive owned 2 8a and the is my second 10. I love the experimentals because they preform well have the same quality as certified, much cheaper to maintain and upgrade. My first 8a I flew for 400 hours upgraded the panel twice Repainted it and made considerable money when I sold it. My first 10 Flew it for 500 hours ugraded the insterior new panel had fun with it for 10 years and almost doubled my money when I sold it. My second 8a made changes to the panel sold the exisitng eq. to cover the cost of the new, still flying this one. I feel very cofident that the day I put it on the market it will sell, anyone looking for one has a handfull of 8a to choose from. When I was considering going to the Cirrus before purchasing this 10 I had over 150 to choose from. In all the changes and upgrades I made I maybe had to buy parts from Vans 1 or 2 times. Once the airframe is complete there is no upgrading, the upgrades come from third party companies. In my opinion IF anything the values will go up.

Access to parts is the difference between hull loss and a repair bill. And all the side-effects that come with that - higher insurance premiums, less valuable planes.

See: V-Tail bonanza ruddervators.

 

[Ronnl001]

My predictions on pricing:

In the next year: prices will fall (high interest rates, increasing supply at market, mildly negative perception of brand due to bankruptcy). Although I’m much less confident in any specific numbers, I’d think this drop is 10-20% (but that could also be a drop in “real” value vs inflation and the price in USD might not fall to that degree or even at all).

In the mid-term: prices will stabilize at their +1 year valuation discussed above. Higher prices of kits will be offset by a relative supply glut from COVID orders. My biggest concern over Vans corporate stability would also be in this time period as I’m afraid they might lose a lot of orders who just forfeit the deposit. If anything, the current requirement to up your deposit will be positive in shaking some of this out early.


In the longer (5+ year) time frame, prices will rise with general inflation including the inflation in new costs. The biggest driver of higher values right now (imo) is the fact that replacement costs are astronomically higher and this will continue to be the case. Persistent economic malaise and/or the cessation of operation by Vans (god forbid - I hope not) could negatively temper long term value increases. Issues with 100LL could also negatively impact GA piston pricing but Vans are best positioned for that potential issue so that could positively impact pricing - at least vs GA as a whole.

 

[JeremyL]

Just looking at numbers, current value, current kit pricing being released and comparing to what they were 3-4 years ago. I’d have to assume the fair market on say an RV 7 with glass, nice interior, upgrade here or there would be in the 250 k range for a newer one with low hours. That’s if the market will bear it. But it seems that price point would be adequate given the nearly 100% increase in kit price and engine price since then. Just spitballing looking at numbers.

 

[Karee Brinlee]

Valuation

I have been wrong all my life about the value of airplanes. I sold two planes I would love to have back that are nearly triple the price they were not long ago. Sold at the wrong time. I had no idea I had a foolproof hobby that appreciated every year.
I always thought the price of planes was about to fall.

Now that I have a nearly completed Van's RV-7 I bet pricing will finally fall right when I have skin in the game again.

Or, maybe that RV will be worth way more than I invested.

I lost my crystal ball the day I was born I suppose... LOL

 

[Mdragon]

Just looking at numbers, current value, current kit pricing being released and comparing to what they were 3-4 years ago. I’d have to assume the fair market on say an RV 7 with glass, nice interior, upgrade here or there would be in the 250 k range for a newer one with low hours. That’s if the market will bear it. But it seems that price point would be adequate given the nearly 100% increase in kit price and engine price since then. Just spitballing looking at numbers.

That pricing gets you into many nice certified airplanes. There is a point where spending high dollars for a plane assembled by a retiree in his garage doesn't fly anymore, pun intended.

 

[rkensrud]

That pricing gets you into many nice certified airplanes. There is a point where spending high dollars for a plane assembled by a retiree in his garage doesn't fly anymore, pun intended.

That's where my brain is right now. I few a Cessna 310 for many years but sold it in 2012 because of high fuel cost (25gph). I'm building an RV10, but these price increases have gotten out of hand. Not just airframe but engine and stuff too. I'll have close to $300k into an RV10 if I keep going. And that doesn't include future price increases in the next 3 years.

Or I can pickup another Cessna 310 for $100k, put $100k into new avionics and maintenance. Sure the hourly cost is more than double, but I'll have $100k left over which should last years. It saves me 2,000 hours of building, gets me 6 seats, O2, air conditioning, etc.

The RV10 has been winning the value game for a long time. I'm not convinced it does anymore for new builders.

 

[JeremyL]

That pricing gets you into many nice certified airplanes. There is a point where spending high dollars for a plane assembled by a retiree in his garage doesn't fly anymore, pun intended.

You got a point there. There still one small caveat that is very appealing to experimental and that is being able to do all of the maintenance as the builder. It use to be about price but now it’s availability and price for certified mechanics to work on a certified plane. Vans indeed may be going the way of the Glasair :/

 

[rkensrud]

You got a point there. There still one small caveat that is very appealing to experimental and that is being able to do all of the maintenance as the builder. It use to be about price but now it’s availability and price for certified mechanics to work on a certified plane. Vans indeed may be going the way of the Glasair :/

That is the long term benefit of experimental for sure. But if the entry cost into a new experimental gets high enough, the long term benefit gets washed out compared to a high end bird from the 70’s. We won’t know if that line is now crossed until the prices actually get released. But we sure took a big step towards it.

 

[Mdragon]

The thing most builders don't accept is that their time is worth so much more. If you are working 2000 to 3000 hours putting an airplane together, and value your time at 100 dollars per hour, you've now doubled the price of an RV10 as the actual cost. You can get a lot of plane for 3/4 million dollars. If your time is worth more than that, the math gets more extreme.

Sure, building can be rewarding, but at the end of the day that's 2 to 3 thousand hours you missed out on doing other things, like spending time with family, travelling, actually flying a plane, reading, fishing, etc.

I bought my plane from the builder. He spent 10 years building it, and who knows how many hours that was. He then flew it for 183 hours and sold it to me. I'm very grateful for his sacrifice, as I paid less than what it was worth in raw parts, and have flown the plane in a couple years far more than he did.

If we did the math for the builder of my plane, his cost per hour flying was upwards of 2 thousand dollars per hour, using 100 dollars per hour as the value of his time.

If you enjoy building, which I know a lot do, then this is a bonus and not a problem. But one must admit, many lie to themselves about what a great deal it is to build a Vans. When you do the real numbers at the end, it can be more expensive to fly a Vans per hour, than a TBM 900 if you're the builder. It certainly was for the gentleman who build my plane.

Vans is increasing their pricing because they made several avoidable business mistakes. Having the customers pay for several fatal business mistakes, which were gross incompetence in my opinion, through inflated prices won't work. You pay way more money, and still get the same sheet metal kit. All the extra money goes to them getting out of bankruptcy, and is not what the kit is actually worth.

Would you pay 150 thousand dollars for a base F150 because Ford made a bunch of stupid decisions? Or would you just buy a much better truck for less money from a company that didn't screw up?

I hope Vans survives, for the spare parts alone going forward, but knowing what I do about free market economies, their business model and pricing moving forward won't work.

Bankruptcy, selling to another owner, restarting with zero debt, under new management is more likely to work. IMO this is where this whole thing will end up. New ownership. It's an amazing design. Someone will come in and keep it going, and make money. It just won't be the people currently in the building.

 

[BH1166]

The thing most builders don't accept is that their time is worth so much more. If you are working 2000 to 3000 hours putting an airplane together, and value your time at 100 dollars per hour, you've now doubled the price of an RV10 as the actual cost.

Meaningless, unless your every waking moment is in revenue generation mode. Builders all know no payback for time.

 

[RV7A Flyer]

Bankruptcy, selling to another owner, restarting with zero debt, under new management is more likely to work. IMO this is where this whole thing will end up. New ownership. It's an amazing design. Someone will come in and keep it going, and make money. It just won't be the people currently in the building.

This. I've held off on saying this, but since someone else broke the ice, here goes.

It doesn't matter if Van's per se survives, as long as some other company or persons buys up the assets and keeps the pieces, parts, and kits available. OR, if they buy the IP and make them available for others to reproduce.

Yes, it'd be great if Van's can wangle their way out of the mess that they themselves created (and can they stop blaming "covid supply chain issues"?), but if they can't and someone else comes in and restarts everything as a new company, so be it. Sic transit gloria mundi.

 

[jimbom]

The thing most builders don't accept is that their time is worth so much more. If you are working 2000 to 3000 hours putting an airplane together, and value your time at 100 dollars per hour, you've now doubled the price of an RV10 as the actual cost..

Meaningless, unless your every waking moment is in revenue generation mode. Builders all know no payback for time.

Meaningless is spot on. This is like saying the cost of flying is $100/hr more than budgeted because of the value of your time. How can you even sleep knowing it's costing you $800/night?

 

[JonJay]

I think some folks have lost site that building an airplane is supposed to be fun, entertaining, and educational. If you base value on the end product only, sans potential maintenance saving, then it shouldn’t matter to you whether it’s certified or not as long as performance and costs are comparable.

Perhaps this new era will challenge those that really never cared for an RV other than, for the price, nothing certified could come close at twice the price.

If you want to build, and believe in the “entertainment and educational” value of the process, just check out what an education or entertainment costs.

The “pro builder” will go the way of the dodo if you believe there are certified airplanes that meet Vans “total performance” objectives, for a similar price. Used RV’s of any type will be lumped in with every other similar aircraft for sale.

I’m not seeing that anytime soon.

As I stated before, if you’re concerned about value, you’re in the wrong hobby. But for some, building was never really an interest, just getting performance for a reasonable price. Nothing wrong with that, but if that doesnt pan out, we can lose a few folks back to the certified world. Their heart was never in it anyway.

 

[airguy]

and value your time at 100 dollars per hour,

If you can value your spare time at $100/hr, then I suppose congratulations are in order. Most of us cannot make that claim. Good for you.

 

[Saber25]

When I started my RV4 in 1986, time I spent building,meant nothing compared to the end result 33 months later. My little fighter has given me all the joy one can expect from a 34 year relationship. She is worth all the money or no money depending on your needs. For me she is beyond a dollar relationship.

A well off fellow at APA offered me 40 grand in 1989 shortly after I had her flying and I just smiled that RV smile. Right now at 76, it's a race to the end. I hope I never have to see her fly over the horizon leaving me behind.

 

[N427EF]

Root cause

Yes, it'd be great if Van's can wangle their way out of the mess that they themselves created (and can they stop blaming "covid supply chain issues"?)

You obviously have not been exposed or affected by COVID related supply chain issues??
This entire mess was the result of COVID related issues including egregious policies coming from heavy handed leadership.
The resulting flow of "free, printed money" to many who didn't really need it caused the overwhelming demand for kits and material that otherwise would have stayed stable and predictable. The resulting shortage of raw materials,
the lack of labor willing to work for wages instead opted to stay home and collect printed money causing yet another issue that we call inflation.
I am in the food business and everything from sugar to flour and chocolate was
and still is unavailable at times and more than doubled in price from where it was 3 years ago. The very same is true for steel and aluminum products as well as many other raw materials needed to build an RV. I could go on but if you don't understand supply chain issues, don't pretend it is not a cause for failure and you will hear and see a lot more COVID related failures in the coming years.
As for Rv resale values, it will be much like anything else affected by shortages and supply chain issues. More buyers than sellers, price goes up and the opposite will be true as well.

 

[RV7A Flyer]

So you're saying that in the absence of covid, Van's could have continued successfully with a) no quality control, b) no inventory control, c) an accounting system that "leaves a lot to be desired", d) ignoring defective products until they reach nearly 2000 customers, and e) selling products for less than they cost?

That's a hellluva business model.

 

[plehrke]

Would you pay 150 thousand dollars for a base F150 because Ford made a bunch of stupid decisions? Or would you just buy a much better truck for less money from a company that didn't screw up?
.

I am positive that the price of a Ford truck includes every engineering, accounting, tax, and contractual screw up along with payout for every lawsuit ever filed against them. Ford just can amortize over a much larger number of vehicles.

Every company screws up to some degree. Some are just more visible than others. To survive you need to factor the cost of those screw ups into future sales. I can’t wait until AI ends all this screwing up and everything gets cheaper. (ps, I got some great land for sale in southern Florida)

 

[N427EF]

You missed the point

Yes, it'd be great if Van's can wangle their way out of the mess that they themselves created (and can they stop blaming "covid supply chain issues"?)

That is not what I am saying and clearly there are serious problems other than supply chain issues including all the ones you mentioned.
The entire chain of events started with COVID related issues.
Supply chain shortages, shipping delays, labor shortages and on and on.
I imagine a scenario much like in my business where Van would have sent someone to visit the quick build facility to check up on things on a regular basis. Now take into account travel restrictions, the very real shortage of willing employees who actually wanted to travel and were available and qualified to do a quality control check.
Remember, it was soooo much easier to stay home and collect a taxpayer handout than go to work.....
Now take into account the same issues in the quick build facility in the Philippines where they most likely faced similar problems. Perhaps they didn't get the primer they needed because of some covid related shipping or production delay and someone decided a substitute would be ok just so they can keep up with the ever growing demand for their product. This scenario could very well have played out like this, I don't know but is more than likely.
A similar story developed at Vans (as Van himself explained) with laser cut parts. All of it grew out of the COVID related fallout mentioned above and some truly incompetent (engineer) decided it was ok to laser cut 2024 Aluminum etc etc..
As for accounting, I have to agree with you. However, Vans was at least for the outsider a very smooth running and profitable companybefore COVID. They simply did not have systems, contingencies or people in place to catch and foresee the devastating results of COVID related supply issues and cost increases.

 

[Sam Buchanan]

thread worn out and closed

Well...this thread has now veered off into politics, COVID, food, trucks and a whole lotta other stuff other than RVs. This thread has more than run its course and is now closed.