Owners trying to sell used Toyotas haven’t seen prices fall, but market researchers say values could ease later this winter if the automaker fails to quickly solve its gas pedal problem.
“We think in the short run there will be an impact on Toyota (used) prices, the magnitude of which we’re not exactly sure of,” said pricing consultant Eric Ibara, who tracks auto values for Kelley Blue Book, an authority on used vehicle prices.
Since the 1980s, owners of Toyota and upscale Lexus models never have faced uncertainty about the price of their autos on the used market. Toyota built a stellar reputation for quality that led it to become the No. 1 automaker in the United States. The image lifted prices of used Toyotas and eventually forced Detroit to engineer better cars.
After recalls of 7.1 million autos in November and in recent days, Toyota announced Monday that dealers should get parts to fix a sticky gas pedal by the end of this week.
Having cultivated an image for meticulous design and engineering, Toyota never before has faced such setbacks in the U.S., its largest market.
“Will people looking for a used car overlook the recall?” said Ibara, director of residual value consulting for Kelley’s kbb.com. “I think eventually they will, especially if the sentiment was the recall was done well. If problems linger, the long-term impact will be severe. But I think Toyota’s reputation for quality leads me to believe they will find a solution and it will be effectively applied.”
It is too soon to predict how the latest recalls might affect prices of used Toyotas, but wholesale price expert Tom Kontos said the November recalls did not seem to change prices of Toyotas on wholesale auction lots by late December.
“I haven’t really seen a deterioration in the value,” said Kontos, executive vice president for customer strategies and analytics at Adesa, the Carmel-based auto auctioneer.
Adesa takes in thousands of newer leased vehicles from automakers and auctions them to used auto dealers throughout North America. After the recalls were announced, Adesa held off auctions of Toyota models, a “groundstop” that will end when the new pedals have reached dealers and mechanics, Kontos said.
Once those Toyotas go back on the auction market, sales will determine whether the values are slipping.
In Indianapolis, a four-cylinder 2008 Toyota Camry LE driven 40,000 miles currently is worth about $10,900 on a trade-in, according to market researcher Edmunds.com.
A comparable General Motors model, the 2008 Chevrolet Malibu LS driven 40,000 miles, is worth about $9,400 on trade in Indianapolis. That $1,500 price difference partly reflects Toyota’s better reputation even in a city long considered a GM bastion.
Now, Toyota faces a national issue few automakers ever have confronted: a mass recall for life-and-death matters. Most big Detroit recalls involved mechanical items that posed no outright threat to people in the vehicle, Kontos said.
Even the Ford Explorer rollovers a decade ago, a deadly problem, were fixed by simply replacing the Firestone tires, noted auto analyst Art Spinella, of CNW Marketing Research in Bandon, Ore.
Irked by Detroit, young baby boomers in the early 1980s flocked to Japanese brands such as Toyota and remained loyal customers, said automotive historian John Wolkonowicz of IHS-Global Insight, a market researcher in Lexington, Mass.
“But this is going to burn through a lot of the Teflon that has been protecting Toyota’s reputation,” Wolkonowicz said.
Wolkonowicz figures the reputation already has been scuffed for Generation X, the baby boomers’ offspring. Reaching its prime earning years, the generation has been tuning out Toyota, he said.
Spinella agrees. Earlier recalls on Camry sedans for engine sludge and warranty issues such as Prius hybrid dashboard gauges “added their own black marks,” he reported.
In CNW’s national survey in January, Spinella said, consumers graded Toyota 8.51 on a scale of 10 for overall quality. This placed the brand 17th, trailing Ford, Saturn, Volkswagen, Mazda, Buick, Honda and 10 luxury makes. In 1990, Toyota trailed only Mercedes and Lexus in a similar CNW survey.
Still, Toyota used prices have remained solid compared to GM. In Indianapolis, Kontos doubts the current recall will change that — if new pedals cures the acceleration problem.
“I don’t think there’s going to be a lasting or even an initial issue on the price” for used Toyota and Lexus models, Kontos said.
