cj3driver 's prediction for the future re-sale value of the Eclipse:
There are many reasons why I think the Eclipse will continue to depreciate in a big way.
1. It was a huge mistake to pre-sell Eclipse’s at way, way below factory pricing, way too far out in the future.
The appeal of a sub-one million dollar jet, produced unheard of orders when re-announced, fueled by the dot-com boom and potential air-taxi operators. Eclipse committed to build hundred(s) of planes fixed at $995K. and many hundreds (thousands) more, at slightly higher price. Eclipse still to this day has a long way to go just to fill these orders. Even the most faithful of the faithful diehards would agree that Eclipse is losing money on these aircraft. Eclipse must make up this shortfall eventually, if it is to remain a viable business.
2. Production rates far exceed new orders.
It is usual and ordinary for new aircraft (similar to new cars) to pre-sell a number of units to purchasers anxious to get a new product. The problem with Eclipse, is that the number of units pre-sold far exceeds the normal market by more than ten fold. This is why there are a magnitude of position re-sales compared to new company orders. The company is competing for new orders with a very fierce competitor, …. their own customers. At the current rate of resale’s, and the number of slots available, this phenomenon will continue well into the future, and probably extend past the point of profitability for the company.
Contrast this with the Mustang. Since the ramp-up of production, Cessna has been selling realistic delivery slots FASTER than the scheduled production rate for the next 3 years. Since Cessna sold very few positions to “speculators” they do not have to compete with but a few slots which resell very quickly at a premium.
3. The owner-flown market at over $2 million is not even close to Eclipse’s proposed production rates.
Since the ramp-up of production at Eclipse, there have been 4 major aviation trade shows. EBACE, Oshkosh, NBAA and AOPA. If the market for Eclipse’s was 500 per year, … or even half that at 250, certainly there would have been hundreds of buyers making deposits prior the announced base price increase at Oshkosh. Given the fact Eclipse has a history of announcing sales achievements (ala Ken 2,700 orders) where are the new order announcements? There aren’t many (if any at all) because of the reasons above. Too much competition from their own customers, and does anyone think there would be an Eclipse “speculator” at this point? …. At least not a speculator of factory positions. The owner flown market has to many choices in the $350K per year arena.
4. Used Eclipses will be plentiful upon the demise of DayJet ETAL.
If DayJet fails, there will be dozens if not hundreds of used Eclipses on the market. These aircraft have a very low cost basis and can be dumped on the market by a lender, or by DayJet themselves at a price way below factory. These planes will compete with other used “owner planes” and unfilled factory positions.
5. New Eclipses positions will be plentiful as orders are cancelled.
Anyone who bought an Eclipse at $1,295,000 (00 dollars) would be better off to write off the original deposit and purchase a resale today. Same goes for the $1,520K slots. Even with complete loss of the original deposit, you can have an Eclipse sooner for less money (from a resale position) than risking any more money and taking delivery year(s) later.
6. In the next several months, the true cost of ownership will be realized and there will be many used planes up for sale.
7. The shaky financials will cause existing position holders to continue to drop the premiums.
8. Due to increased costs the price of the E500 will continue to force the price higher, further reducing demand, and accelerating the demise of the company due to competition.
9. The weak dollar may further hurt Eclipse as may of the components are outsourced to foreign companies.
FlightCenter added a tenth point:
10. The problem for Eclipse is going to come when Cirrus and Diamond start delivering their jet products at lower price points than Eclipse, then they will be the ones to capture the lions share of the folks stepping up from the piston world.
Eclipse is the middle of a sandwich, getting squeezed from above and squeezed from below.