I think Bruce's analysis of your situation is pretty "right." Let's assume
your seller-friend was fooled by the Honda's looks. This means he believes
that he has paid off a substantial part of what he owed you. You must make
it clear to him that when he got fooled, he didn't obligate you to accept
the loss.

Since he will probably be slow to come up with any more payments, I would
offer to keep the gen-set on trial, and make performance and durability a
negotiable part of the price. And then I would use the hell out of it, so
if it is going to break, it happens soon, while he still has a feeling of
obligation.

What does it mean--he sold them at a loss? You didn't charge him for the
stuff, so what is the loss? Had you agreed on the selling prices? Did he
lower the prices without consulting you? He sounds like a Bozo to me.