Troubleshooting Oil Burn and Power Loss on a Mustang 330 with Onan Engine

[MikePhua]

The Mustang 330 and Its Onan Powerplant
The Mustang Model 330 skid steer loader was introduced in the mid-1970s as part of Mustang Manufacturing’s compact equipment lineup. Mustang, founded in 1865 and later acquired by Manitou Group, built a reputation for durable, no-frills machines suited for residential grading, farm work, and light construction. The 330 was powered by an 18-horsepower Onan MHC MS/2699B engine—a horizontally opposed, air-cooled twin-cylinder design known for its simplicity and torque delivery.
Onan engines were widely used in generators, RVs, and compact equipment during the 1970s and 1980s. While reliable, they were sensitive to fuel delivery and crankcase ventilation issues, especially as they aged past 3,000 hours.
Symptoms of Oil Consumption and Hydraulic Load Shutdown
After years of light-duty use and long idle periods, one Mustang 330 began burning oil through both cylinders and bogging down under hydraulic load. The engine ran better at idle and full throttle when hydraulics were disengaged, but emitted blue smoke consistently. These symptoms suggest a combination of oil control failure and fuel delivery irregularities.
Key observations included:

• Blue exhaust smoke under load
  
• Engine shutdown when hydraulics engaged
  
• Clean air filter and crankcase breather
  
• Electric fuel pump installed in place of original vacuum pump
  

Root Causes and Diagnostic Path
The most likely causes of oil burning and power loss include:

• Worn piston rings: Especially in cylinder #2, which had prior wear history. Oil bypasses the rings and enters the combustion chamber.
  
• Faulty fuel pump switch: An intermittent short in the electric pump switch caused erratic fuel delivery, leading to lean conditions and increased crankcase vacuum.
  
• Crankcase vacuum imbalance: Plugging the original vacuum line without proper venting may have disrupted pressure regulation, pulling oil past worn rings.
  
• Governor misadjustment: If the governor linkage is out of spec, throttle response under load may lag, compounding shutdown behavior.
  

One technician noted that switching back to a vacuum-operated fuel pump restored consistent fuel flow and reduced oil draw, suggesting that the electric pump setup had introduced unintended pressure dynamics.
Recommended Solutions and Adjustments
To address these issues:

• Perform a compression test on both cylinders. Readings below 90 psi indicate ring or valve wear.
  
• Inspect and clean the crankcase vent tube, ensuring it’s not blocked by debris or insects.
  
• Replace the fuel pump switch or revert to a vacuum pump with proper line routing.
  
• Check governor spring tension and linkage travel, adjusting to factory specs if available.
  
• Use high-detergent SAE 30 oil to reduce carbon buildup and improve ring sealing.
  

If compression is low and oil consumption persists, a top-end rebuild may be necessary. Onan parts are scarce but still available through specialty suppliers and vintage engine forums.
Ownership Reflections and Upgrade Considerations
The Mustang 330 was originally purchased for grading and general property maintenance. With only 200 hours of personal use over a decade, the hydraulics remained strong, and the loader arms showed minimal wear. However, the aging engine and parts scarcity prompted the owner to consider upgrading to a newer machine.
Modern skid steers offer:

• Tier 4-compliant engines with electronic fuel injection
  
• Improved operator ergonomics and safety features
  
• Easier access to parts and dealer support
  

Still, for low-hour seasonal use, repairing the 330 may be more economical than investing in a newer unit. One operator noted that his rebuilt Onan engine lasted another 1,200 hours after replacing rings and cleaning the breather system.
Final Thoughts
The Mustang 330 remains a capable machine for light-duty work, but its Onan engine demands careful attention to fuel delivery, crankcase ventilation, and ring wear. Electrical modifications, such as switching to an electric fuel pump, must be done with full awareness of pressure dynamics. With proper diagnostics and targeted repairs, the 330 can continue serving reliably—though owners should weigh the cost of restoration against the benefits of modern equipment.