How does engine replacement affect car's value?

volvo
xc90

#1

Our car is a 2016 that has an oil burn issue. The manufacturer is replacing the engine as they want our engine returned in order to diagnose the oil issue in an effort to head off issues for others. We have only had the car a few months and the issue arose within the first few weeks. We have made a request through the dealer that the manufacturer replace the car but we are waiting on that determination.

If the manufacturer does does agree to replace the car, how will a new engine replacement affect the car’s value? As it will likely be listed in Carfax, we assume potential buyers will likely be hesitant to purchase the car.


#2

Assuming you meant does not replace car, there is not a real answer. It all depends on how long you keep car, whether you sell yourself or trade. If this is actually a new engine being installed just drive on and keep a close eye on fluids
.


#3

The manufacturer does NOT have to replace the entire car! Your warranty specifically covers details. If the car was unsafe for some reason and could not be repaired, a replacement would be warranted.

A few years ago a friend bought a loaded V8 Buick, only to have the engine replaced after a few months as it seized up. It did not affect the resale value; these things happen. Many Oldsmobile diesels were replaced with gasoline engines and happily served out their time as taxis. Since the cars had a generally bad reputation it may have affected the resale value.

To save time, accept the dealer’s offer and live happily ever after.


#4

While I’m not a big fan of Volvos these days their approach to this situation is outstanding from my point of view. My opinion of the brand might need rethinking.


#5

You’ll be getting an engine that is newer than the rest of the car. If the work is done by a professional shop, which the dealer certainly is, there’s no reason it would affect the value of the car.

Whether or not it shows up on Carfax isn’t really that big a deal. People who rely significantly on Carfax when deciding on a used car don’t have a clear understanding of how it works.

I just bought a nice refrigerator. If the compressor in it fails in a few months, Kitchen Aid doesn’t owe me a replacement fridge, they just need to replace the compressor in this one. That’s how a warranty works. I don’t see how Volvo stepping up and replacing the engine would lower the value of the car.


#6

On a new car it isn’t going to matter one bit. It is simply warranty work. Not the first time an engine or transmission needed to be replaced. Now on a car a few years old though, one would wonder why the engine was a problem and if that also indicates the condition and maintenance of the rest of the car. On the plus side though, I would much rather have them replace the engine with a factory special than taking the current one apart. My folks had a new Plymouth back in the 70’s with an oil consumption problem and the dealer dismantled the whole engine rather than replacing it. It was never the same again and they traded next year.


#7

I don’t think it should affect the value of the car negatively. We had the transmission on one of our cars replaced at 58,000 miles under warranty. We still have it. The rest of the car has 180,000 miles on it, but the transmission only has 120,000 miles. It seems to me that would be a bonus for someone if we chose to sell it.


#8

The car is NOT a 1967 L72 Corvette with “numbers matching” engine and transmission. So no, replacing the engine is not a red flag or reduced value.

Some Corvette owners sued GM a number of years ago when just such a “replace engine under warranty” order went out because they thought their cars lost value because the original engine was removed. Silly Corvette owners!

It’s a collector thing, not a consumer thing. No worries.


#9

The only case I remember was some Oldsmobile models sold with Chevrolet V8 engines due to a shortage of Olds engines. The owners sued because they felt “short changed”. Not a real issue but I believe the courts sided with the owners.


#10

What’s wrong with the rest of the car? The engine consumed oil; the offending part (i.e. the engine) has been replaced. (Which is what you do when something on your car breaks: remove and replace; put back into service.) If your transmission/air conditioner/cupholder broke, you wouldn’t expect to get a brand new car out of it, now would you? (Would you?)

A “factory new” engine on a used car will tend to INCREASE value, but by an amount considerably less than the market value of the engine. A “150,000 mile car” would be worth less than a “150,000 mile car…with 10,000 miles on a factory reman.” (In fact, cars with brand new engines and trannies tend to BRAG about the fact in the advert.) The car has depreciated…the engine, far less. (Actually, the IRS would consider a new engine as a separate, depreciable asset come tax time…even the Tax Man acknowledges that a new engine ups your vehicle’s value.)

In your circumstance, however, you’re replacing such a young engine that the “fewer miles” on the replacement will have negligible value come time to sell it: a 150,000 mile car costs about the same as the same car with a 135,000 mile engine.


#11

@meanjoe75fan - I learned the same thing from my brother (retired autobody man and insurance appraiser) – a new engine, currently being put into my 2013 Ford Escape, will enhance the value. He was less certain how to calculate it – other than to caution me to save documents so I can prove that the odometer hasn’t been tampered with.
Do you know: is it enough just to enter information on, say, edmunds.com, and describe mileage as “0”? I did that and found about a $2,500 uptick in value over the mileage before my engine died. (according to the mechanic, there is nothing I did wrong to cause the probelm but all the same this is a car with pretty high mileage so my situation is a little different than the original commenter.) The question about who is REALLY at fault for this breakdown is probably a different thread on the forum . . .


#12

It’s not quite that simple, Roberta. You ma y have a new engine, but the rest of the Escape is still five years old. The transmission, suspension, brakes, tires, cooling system, and everything else I see five years closer to failure than the engine is.


#13

The mileage stays the same in all calculations, and in no way goes back to zero. A new engine only adds value in the sense that the car is worth substantially more with a working engine than a non working one.


#14

If I see a Carfax report showing new engine I might just pass because it would make me wonder if the vehicle was not maintained as it should have been.


#15

I see a new engine, plus in my book. Dealer trade no gain, private sale possibly.


#16

I agree. If I see “new engine” on a newer vehicle, I’d fear poor maintenance might’ve caused the failure, or something might’ve went wrong on the installation and now the owner of the vehicle is trying to sell their problem.

On the other hand, if I see “new engine” on an older car with over 100k miles, I consider that a positive thing.


#17

Just to reiterate again after a couple years, engine failures requiring replacement are just not real common anymore. Engines generally last the life of the car in my view. So a car with a new engine really wouldn’t impress me much and I would always question why it was necessary. Is it a problem engine? Was it poor maintenance? It would be a red flag to me.


#18

That depends on when the major part replacement took place. We had the transmission replaced under warranty on a van at 58,000 miles with a new unit. The work was done by a dealer. As we rolled past 100,000 miles, I considered the replacement a plus since the transmission was always 58,000 miles younger than the rest of the van.


#19

I would consider an engine or transmission replacement “under warranty” as a different issue, and not a red flag. Of course the question would be if the engines or transmissions were an engineering problem in the first place and maybe not that dependable.


#20

I bought a used 1990 Ford Aerostar van in 1991. A year later, the engine was replaced under warranty. There was a hairline crack in one of the cylinder heads. Enough coolant had leaked into the cylinder to score the cylinder wall. The Ford dealer replaced the engine with s new engine.
I was glad to have a new engine. I doubt that it hurt the resale value. When I buy a used vehicle, I want an engine that runs and doesn’t burn oil, a transmission that shifts as it should and a body that isn’t rusted. If s used car meets these conditions, it makes no difference to me if the parts are original or replacements.