Winter 2017 Cessna Citation Markets Update

Cessna Citation Mustang

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Mustang
The last quarter of 2016 logged three (3) new Mustangs delivered from the factory, down one from Q3, bringing the total number of Factory-new Mustangs delivered in 2016 to ten units; an increase from the eight that were delivered in 2015. For comparison sake, the factory delivered an impressive 133 Mustangs during their peak production years in 2008-2009. The continual reduction of new factory deliveries since then has many speculating as to when Mustang production might cease, though the factory has not released anything official in terms of a statement.

Pre-owned inventory levels have been on a steady rise since early 2014, however, foreign (non-US) registered Mustangs continue to account for nearly one half of the available inventory, giving buyers shopping specifically for “N” registered aircraft a much smaller selection. While average values may be down, compared year over year, demand for fairly priced pre-owned Mustangs remains strong, with an average of 16 units trading hands every quarter over the past two years. 2007-2009 models are selling in the $1.55M-$1.75M range, 2010 – 2012 in the $1.8M – $2.1M range, 2013-2014 in the $2.1M – $2.3M range, and 2015 and later in the mid/high $2Ms.

Outlook: With the slow-down in new deliveries, we believe the pre-owned market will see further stability in values and continued demand. We predict inventory levels will see little change through Q1 of 2017. Buyers shopping for a Mustang may look to act sooner rather than later to get the best deals.

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Citation Mustang Values & Inventory Levels

Citation Mustang Average Value (2010 Year Model)
% of Fleet for Sale

Cessna Citation Mustang Winter 2017

Current For-Sale Inventory41
Total Fleet473
Percent of Fleet for Sale (Current)8.7%
Pre-Owned Transactions (Q4 2016)16
Average Days on Market*150
New Deliveries (Q4 2016)3

*For Aircraft Sold in Recent Quarter. Does not include “Off Market” sold aircraft.

Mustang Historic Pre-Owned Transactions

Cessna Citation CJ/CJ1/CJ1+/M2

The theme of the final quarter of 2016 for the CJ/1/1+/M2 market was one of inventory-clearing. Inventory levels at the end of 2016 were at some of their lowest points in recent years, with the M2 being the exception as those levels remained relatively flat for most of 2016. Although combined transaction levels for this segment were lower than all of the previous three quarters in 2016, Q4 2016 saw a ~17% jump in transactions compared to Q4 2015.

The “Straight-CJ”, aka CitationJet, market is still quite active as this model presents a tremendous value with average values around $1.0M. Inventory levels have continued a downward trend since they peaked above 20% of the fleet in early 2012. This has helped keep values level, proving to be a very healthy and balanced market. We are seeing more G1000-retrofitted CJs being sold in the resale market, commanding prices in the mid-high $1Ms for planes fully enrolled in TAP engine programs. Outlook: Expect inventory levels to hover just below the 10% mark and activity to remain robust.

The ProLine-21-equipped CJ1 market had become inflated with inventory in late 2015, and as a result, values suffered. However, these lower prices made the CJ1 attractive to buyers, which then caused the inventory levels to drop back down throughout most of 2016. We see the CJ1 as a great option for those who want additional weight-carrying capability and more modern avionics over the CJ, but don’t want to stretch to the CJ1+. A buyer should plan to spend in the $1.3-1.5M range for a CJ1 on TAP engine program. Outlook: Expect inventory levels to decline slightly as values stabilize.

The FADEC-equipped CJ1+ has remained consistent in terms of transactions, but as this is the smallest of the CJ fleets at just over 100 aircraft flying today, the number of aircraft changing hands is much lower than the other models. Two CJ1+s sold in Q4, bringing the year total to only eight total machines having sold. Inventory levels have stayed flat, though values have dropped into the low $2Ms. Outlook: All should remain status quo: 2-3 planes to sell per quarter with values and inventory levels staying flat.

The G3000-equipped M2 fleet continues to grow, and planes continue to sell on the preowned market with regular cadence. Inventory levels remain at some of the lowest in the light/medium jet market, so most sellers can expect to sell in less than 90 days if priced appropriately. It’s a tried and true airframe with the incredible G3000 up front and tons of new technology in the cabin; it’s hard not to love this jet. Outlook: Low inventory levels will continue and average pricing should stabilize in the mid $3Ms.

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Citation CJ Values & Inventory Levels

CJ Average Value (1997 Year Model)
% of Fleet for Sale

Citation CJ1 Values & Inventory Levels

CJ1 Average Value (2000 Year Model)
% of Fleet for Sale

Citation CJ1+ Values & Inventory Levels

CJ1+ Average Value (2006 Year Model)
% of Fleet for Sale

Citation M2 Values & Inventory Levels

M2 Average Value (2013 Year Model)
% of Fleet for Sale

Cessna Citation CJ/CJ1/CJ1+/M2 Winter 2017

 CJCJ1CJ1+M2
Current For-Sale Inventory372496
Total Fleet349196102138
Percent of Fleet for Sale (Current)10.6%12.2%8.8%4.3%
Pre-Owned Transactions (Q4 2016)10722
Average Days on Market*197383120127
New Deliveries (Q4 2016)---11

*For Aircraft Sold in Recent Quarter. Does not include “Off Market” sold aircraft.

CJ/CJ1/CJ1+/M2 Historic Pre-Owned Transactions

Cessna Citation CJ2/CJ2+

The CJ2 inventory levels have been hovering in the 8-9% range over the past three years, and with values on a very slight decline, we consider this jet hard to beat in terms of performance, payload/range, and pricing. Q4 of 2016 was very active for the CJ2 market, with 12 jets having traded hands, a level not seen since early 2015.

Most of 2015 and 2016 were difficult times for the CJ2+ market. Inventory levels skyrocketed in early 2015, which were partially to blame for the drop in values in a relatively short period. The CJ3 market also played a role in decreased values as downward pricing on CJ3s put subsequent pressure on the CJ2+ market. However, as average values dropped into the mid $3Ms for CJ2+s, this jet evidently became increasingly interesting to buyers, and this caused a surge of transactions in the mid-low $3Ms in Q4 2016, thus reducing inventory levels to pre-2015 levels.

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Citation CJ2 Values & Inventory Levels

CJ2 Average Value (2004 Year Model)
% of Fleet for Sale

Citation CJ2+ Values & Inventory Levels

CJ2+ Average Value (2010 Year Model)
% of Fleet for Sale

Cessna Citation CJ2/CJ2+ Winter 2017

 CJ2CJ2+
Current For-Sale Inventory1917
Total Fleet237225
Percent of Fleet for Sale (Current)8.0%7.6%
Pre-Owned Transactions (Q4 2016)1212
Average Days on Market*210311

*For Aircraft Sold in Recent Quarter. Does not include “Off Market” sold aircraft.

CJ2/CJ2+ Historic Pre-Owned Transactions

Cessna Citation CJ3/CJ3+

The dynamic CJ3 market the past 18 months saw a spike in activity in Q4 2016. Going into the Fall months of 2016, we thought this market was in free-fall mode, with inventory levels steadily climbing, and values headed south. However, it appears the flood gates opened to release the pent-up sales of CJ3s in Q4. With 15 pre-owned jets having sold, Q4 was up 67% over Q3, and up 25% from Q4 2015. Moving further into 2017, we anticipate inventory levels will continue to decline as prices stabilize.

Textron has been delivering the mid-$7Ms, G3000-equipped CJ3+ on a regular beat over the past couple years now with the fleet now approaching 60+ aircraft. Based on Textron’s recent announcement of reduced production of 510 and 525-series moving forward, though, we fully expect the new deliveries to slow down in 2017.

In Q4 2016, we observed the first CJ3+ aircraft to trade hands on the resale market since the model started delivering in 2014. While this market is still too young to determine where the resale market pricing will shake out, it’s nevertheless one we at jetAVIVA will be watching carefully.

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Citation CJ3 Values & Inventory Levels

CJ3 Average Value (2009 Year Model)
% of Fleet for Sale

Cessna Citation CJ3 Winter 2017

 CJ3CJ3+
Current For-Sale Inventory290
Total Fleet41358
Percent of Fleet for Sale (Current)7.0%0%
Pre-Owned Transactions (Q4 2016)152
Average Days on Market*317112
New Deliveries (Q4 2016)-8

*For Aircraft Sold in Recent Quarter. Does not include “Off Market” sold aircraft.

CJ3/CJ3+ Historic Pre-Owned Transactions

Cessna Citation CJ4

The pre-owned CJ4 market had a difficult run in 2016. Inventory spiked to levels not seen ever in the CJ4 world, and this, combined with falling prices of the CJ3s, caused an average drop in CJ4 values of 15% over the course of the year. There is a certain threshold in the pricing delta between CJ3 and CJ4 models, above which the CJ4 is hard for buyers to justify over the CJ3, and it’s this inter-model relationship that affects the values of the entire 525-series line-up. There are certainly buyers for CJ4s, so the sooner Sellers become willing to accept the decreased values of their jets, the sooner Buyers will come swoop up the excess inventory.

New CJ4s have continued to deliver from the Textron factory in regular cadence, but as with the CJ3+, M2, and Mustang, Textron has advised [from their 2016 Q4 earnings report call] that production of 525-series jets will be noticeably decreased in 2017. We anticipate this reduced production will bolster the pre-owned market values.

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Citation CJ4 Values & Inventory Levels

CJ4 Average Value (2011 Year Model)
% of Fleet for Sale

Cessna Citation CJ4 Winter 2017

Current For-Sale Inventory20
Total Fleet233
Percent of Fleet for Sale (Current)8.6%
Pre-Owned Transactions (Q4 2016)4
Average Days on Market*189
New Deliveries (Q4 2016)4

*For Aircraft Sold in Recent Quarter. Does not include “Off Market” sold aircraft.

CJ4 Historic Pre-Owned Transactions

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