Toyota Prices Take Some Hit, Edmunds.com Reports
By Michelle Krebs February 11, 2010Recalls, stop-sales orders and the accompanying bad press have put downward pressure on 
prices of new and used Toyota vehicles, but the hit is not as huge as might be expected, according to an analysis by Edmunds.com.
New vehicles specifically covered by Toyota recalls are selling for an average of 0.5 percent - or $150 per vehicle - less than earlier this year, according to the most recent adjustments made to Edmunds.com's True Market Value pricing.
Used Toyota vehicles covered by recalls are selling for about 3 percent less than earlier this year, according to Edmunds.com. However, dealers --- either being cautious or opportunistic -- are paying about 6 percent less for Toyota trade-ins than they did before the recalls were announced.
It should be noted that Toyota vehicle had always commanded some premium over its competitors and resale values were among the strongest in the industry. The downward pricing pressure comes on prices -- new and used -- that were higher than most in the industry.
Edmunds.com pricing analysis looked at vehicles covered by Toyota's most recent recalls. For the 2.3 million vehicles in the United States recalled for sticky pedals, they are: Toyota Avalon, Toyota Camry, Toyota Corolla, Toyota Tundra, Toyota Sequoia, Toyota RAV4, Toyota Highlander and Toyota Matrix. In addition, the pricing analysis looked at the Toyota Prius recalled for brake problems.
On new models, consumers can expect to pay about $160 less for a Toyota Camry than before and $200 less for a Sequoia, with all other models covered by the sticky pedal recall selling for only about $30 to $100 less than before. On Prius, customers can expect to pay about $328 less than before the recall.
Trade-in prices for the eight Toyota models covered by the sticky pedal recall vary based on mileage and vehicle conditions, but, Edmunds.com's analysis, shows generally those prices are down 5 percent to 10 percent on 2009 models. More specifically, trade-in prices for the Camry are down about 6 percent, the RAV 4 is off 7 percent and Corolla is down 8 percent.
Lower prices are likely putting pressure on dealer and automaker profit margins. Earlier this month, Toyota Motor Co. posted a profit for the third quarter ended Dec. 31, 2009, and announced it expected to turn a profit for the full fiscal year, which ends March 31, despite the recalls. Previously, Toyota had expected a loss for the full year.
Some analysts, however, say Toyota is being too optimistic about how it will weather the recalls and bad publicity. They say Toyota's estimates for lost sales -- 100,000 globally -- and the cost of the recalls -- $1 billion over these two quarters -- are far too conservative.
Higher Prices for All
Despite the dip in Toyota prices, likely to be only temporary, prices on all vehicles are likely to rise in the future due to the focus on Toyota's quality problems.
"As a result of the public spotlight on Toyota's recalls, automakers may have no choice but to devote more resources to safety in the future," said Edmunds.com CEO Jeremy Anwyl. "Cars may be equipped wtih more on-board diagnostic sensors, be subject to more testing and be built with higher quality parts."
Consumers may have no choice but to pay the higher price, he added.
Indeeed, as Toyota faces hearings before various Congressional hearings in the upcoming weeks, mandates for new safety features is a possible outcome. -- Michelle Krebs, Senior Analyst and Editor at Large
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As long as Toyota learns from this and never does this again in a few years I think the resale values on their cars wil be fine but if they continually hide defects from their customers they will be GM of the 1980's-mid 2000's. The incidents with sticky pedals, and floor mats will ruin some brand equity that Toyota had in the short term as well as resale values in the short term.
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