I get asked this question a lot. The answer really depends on your situation and what you value in your overhaul. Sometimes the factory fits someone’s goals better and vice versa. So I recommend reading the article below and you’ll be able to determine which is a better fit for you.
But, before I can answer this question I have to define a couple of things mentioned in 3 Levels of Overhaul.
Overhaul – An overhaul can be done to two limits: 1. Service Limits and 2. New Limits as defined here. Note: a “Lycoming Factory Overhaul” is a service limit engine.
Factory Rebuild – An engine rebuilt by the factory using new and used parts to New Limits.
Factory New – An engine built by the factory out of 100% new parts to New Limits.
According to a survey, about 10% go with the factory rebuild option and 3% buy factory new. But these numbers are probably much higher now because the price difference between overhaul and factory engines has reduced. Personally, I think closer to 15-20% go factory these days.
Service Limit build standards are inferior to New Limit overhauls. For most overhauls done near TBO, they aren’t even considered by pilots. In fact, most quality shops will actually refuse to do a service limit overhaul because they don’t want any liability or warranty issues down the road. Lycoming’s “Factory Overhaul” is a service limit engine but it comes with new cylinders.
Remember, New Limit Overhauls are done by overhaul shops/mechanics and Factory Engines are made in the factory or their designated facility and sold mainly by distributors like Air Power.
Build Standards
The build standards for a New Limit overhaul are the same as factory engines. In other words, they are both built to ‘New Limit’ standards. This puts New Limit Overhaul on the same level as a Factory Rebuild. But, are there differences in the parts that go inside?
Parts
Most overhaul shops will reassemble engines to New Limits with the engine parts you send in. A Factory Rebuild is assembled to New Limits from a pool of new and used parts. The used part pool is populated in part by engine cores that are sent in for exchange. So the crankcase that is used on your engine might have 200 hours on it, or it might have 5,000 provided it meets new limits. Luck of the draw.
I might be going into too much detail here, but it’s possible the factory could pull out a crank case that has been machined once or twice and brought up to New Limits, but doesn’t have enough material to be machined again to New Limits. In other words, this could be that part’s last run. On the other hand, the factory might not have a used case or crank on-hand when you order and you’ll get a brand new one.
There’s also the difference between factory genuine parts and non-factory genuine parts known as PMA Parts. Factories use all factory-genuine parts, and overhaul shops typically use a combination of factory genuine & PMA but there’s more financial incentive to use the less expensive PMA parts. Overhaul shops do vary on this matter so check with your shop.
‘Factory New’ engines have the best offering for parts – 100 % new. But they’re also the most expensive option.
Lastly, A overhaul shop might overhaul your existing cylinders if you want to save money, but the factory will always put new cylinders on all their engines.
Flexibility
Overhaul shops have more flexibility than factories have in terms of build processes and options. Here are some examples:
Build Process
An example of a build process is port and polish work where extra material is removed from the intake and exhaust ports so that gasses can flow more easily in and out of the cylinders to gain an extra 2.5-4 HP per cylinder. A process like this is not offered at the factory and would likely void the warranty. If you want custom processes like this, an overhaul shop is probably the way to go. But be careful – some build processes are for ‘experimental’ only.
STC
Factories do not sell or provide STC’s with only 1 exception – the Lycoming IO-390 engine. So you have to purchase the STC separately. An example is an upgrade to a bigger engine. Factories do this all the time and the warranty is fully supported.
But there are some STC’s that may void the factory warranty (usually modifications to a certified condition). An STC to run automotive gasoline might be an STC that could hurt your warranty. You should check with the factory on the ones that you want.
You can look up STC options by aircraft here.
Financial Risk
There is more financial risk of sending your engine to get overhauled than buying a factory engine. Why?
The price you get from the engine shop assumes that your crankcase and crankshaft don’t have to be replaced. These are big ticket parts. A crankshaft or crankcase for a Bonanza might cost around $4,500 for a New Limit overhauled replacement.
Crankcase and Crankshafts have about a 10-20% probability of needing replacement. The factory won’t charge you extra for a bad case or crank as long as you meet their core return policy.
Also, some shops might charge extra if your crankcase or crankshaft need to be sent out for repair. In other words, at these shops, if these parts don’t wash off in ‘new limit’ condition you might have to spend around $1,500 to get them repaired. Around 60-70% of the time, this is necessary. The good news is, most big shops include this repair, if necessary, in your price. See price contingencies for more information.
Lastly, most pilots these days get new cylinders and a new camshaft. But, if you’re planning on saving a buck by getting them overhauled instead, you might bear the cost of replacement if they can’t be repaired.
Zero Time
I like to think of “Zero Time” as a trademark owned by the factory. We’ve established that a New Limit overhaul and a factory rebuilt engine have the same build standards, but only a factory can produce a Zero Time engine with a fresh logbook. Overhauled engines keep the same logbook but start counting ‘time since major overhaul’ starting at zero. There’s a great article by AvWeb that goes into further detail on this.
Despite this truth, every aircraft owner selling their aircraft will use a “Zero Time” engine as a marketing gimmick to get more money. Heck, I probably would too. Someone might take the bait.
Aircraft Value
Imagine you have two Identical Cessna 172’s except one has a Factory Engine and the other has an Overhauled Engine, which would you choose? The majority would choose the factory engine 172 so this could help your plane sell faster and for more money. But, if you spent $5,000 more on the factory engine, will you get $5,000 back out of it?
The answer to that last question really depends on who the buyer is and how they look at it. I think a good analogy for this question is the difference between Motrin Ibuprofen and Target’s generic Up & UP Ibuprofen. We know they have essentially the same ingredients, are built to the same specs, do exactly the same thing, but some people like to spend more money on Motrin because they recognize the brand.
It’s also worth pointing out here that some overhaul shops have more value than others. I have some amazing independent engine builders in my network that overhaul engines at or above par with major shops. But, if your buyer has never heard of them, are they going to assign the same value to that engine as you have? Probably not. Engine value will be proportional to shop reputation and recognition.
Lastly, as I’ll point out below, many overhaul shops have better warranties than the factory. So will a factory engine out of warranty carry more value than its overhauled counterpart that is still in warranty? This might be an important consideration if you have a plan to fly 2 years and sell it.
Turn Around Time
Out of the approximately 75 overhaul shops in the US that work on Lycoming and Continental, I’d estimate there are only 10 with a decent stock pile of engine cores and parts that are ready to be built up and sold as an exchange for your engine. These shops can compete and usually beat the factory on turnaround time.
If you want your engine overhauled to New Limits it will take anywhere from 4-8 weeks. If you want a factory engine, the timeline to build it will really depend on your engine model and workload. There are so many engine models out there, it makes it hard for factories to have engines already built and sitting on a shelf waiting for a buyer. Most of the time, the factory will build up your engine after you order it. The build time for that is similar to an overhaul shop most of the time. But again, it depends on engine model.
Price
When I quoted every piston engine overhaul shop in the country on a Continental IO-550-C, there were only 2 overhaul shops that exceeded the factory engine price. Everyone else was more than 20% cheaper than the factory rebuilt price. On average, I’ve noticed that factory engines are typically 20-30% more expensive than New Limit Overhauls from reputable overhaul shops.
We have to give the factory the advantage of reducing risk of paying for replacement parts like crankshaft or crankcase. So let’s do a quick math example of how to level the playing field.
Assume a New Limit overhaul costs $30k but there’s a 10-20% chance we have to replace a case or crank for $5k each. We should add $1,500 to the price of this overhaul because 15% of $10,000 is $1,500.
So to be fair to the factory when comparing price, adjust for the probability of a case or crank replacement. Most of the time, you’ll find that it’s still cheaper than the factory.
Lastly, it’s worth discussing the scenario of a case or crank replacement with the overhaul shop you’re considering. Sometimes you have a situation where both case and crank need replacement and the factory becomes the cheaper option (maybe 1 out of a 100). Ask the shop what you would owe them if you decided to send the engine to the factory after it was taken apart. Most shops only charge the labor they put into it and go to great lengths to make sure the customer is still happy with their service.
Liability Insurance
I hate addressing this one, but we all know the litigious propensities of our society and therefore it’s worth touching on. If something catastrophic happens in flight and the shop or factory is deemed negligent, their ‘product liability insurance’ will kick in. Most overhaul shops do not have product liability insurance because its cost is often six figures annually. Only a few of the biggest shops can pay this bill. The factories probably have this insurance but I have not confirmed this for sure.
Warranty
Most people would agree that overhaul shops have an advantage over the factory for warranty. Many overhaul shops have warranties that exceed that of the factory. This is pretty important since roughly 30% of engines will have a warranty claim of some kind.
It’s also important to point out that many overhaul shops routinely cover more than the writing obligates them to. An example of this is shipping cost. Most warranties put shipping cost on the owner, but one of the shops in my network said that he covers shipping both ways 9/10 times.
TBO
In February 2012 Continental received a 200-400 hour TBO increase on most factory produced engine models. The 400 hour increase only applies to engines that fly 40+ hours per month. New Limit Overhauls done at overhaul shops keep the same TBO. So check to see if you can increase your TBO with a factory engine.
Continental vs Lycoming Differences
- You can buy direct from Continental but not Lycoming
- Lycoming offers a service limit engine called a “Factory Overhaul”. Continental does not
- Lycoming will overhaul your engine or offer an exchange. Continental only does exchange
Aircraft Age
Newer and more valuable aircraft generally lean toward factory engines. Older and less valuable aircraft generally lean toward overhaul shops. It’s a lot like cars. New cars tend to use the dealer for maintenance and older cars go to the independent shops. Of course, this is a generalization and exceptions exist.
A few months ago I was shocked when a turbo normalized Cirrus owner decided to buy a factory engine for $22,000 more than what the overhaul shop would have cost him. Normally the difference between factory and overhaul shops is $2-5,000 and most aircraft owners go to an overhaul shop. So when I saw a difference of $22,000, I thought for sure this guy was going to buy from an overhaul shop. After all, he was not getting $22,000 of extra quality with the factory. But, he wanted to spare no expense and always buy premium with his aircraft since it was high value.
Summary
Deciding whether to buy a New Limit Overhaul or a Factory engine is a tough one. My advice to everyone getting an overhaul is to consider both and decide which best fits their goals and budget.
