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NINETY EIGHT REGENCY

Analyst: Recalls, rivals erode prices of used Toyotas

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Analyst: Recalls, rivals erode prices of used Toyotas

Arlena Sawyers

Automotive News -- February 1, 2010 - 12:01 am ET

The once-strong prices of used Toyota brand vehicles have eroded gradually over the past four years, compared with Honda's cars and trucks. With massive recalls and a suspension of vehicle sales by Toyota Motor Sales U.S.A. Inc., that trend will continue, one analyst predicts.

Jonathan Banks, senior director of editorial and data services at NADA Used Car Guide, says he doesn't think the prices of used Toyota cars and trucks will suffer a free fall in the near term. But he sees a gradual price decline.

Moreover, as Ford Motor Co. and General Motors Co. improve their vehicle quality, Toyota's reputation for better quality will diminish, Banks says. He did not have a timetable.

"I see Toyota falling into the pack," Banks says. "I expect it to be gradual. I don't expect them to fall off a cliff because they are still Toyota, and we still expect a demand for Toyota models.

"We assume they are going to fix this issue fairly quickly. But with the improvements the domestics have made in quality, I think Toyota's resale performance will fall more in line with their competitors'."

Data compiled by the NADA Used Car Guide show that in January 2006, the average values of used 2- to 4-year-old Toyota Camrys were $312 less than the average values of similarly aged Honda Accords. And 2- to 4-year-old Toyota Corollas were fetching $293 more than similar Honda Civics.

But by January 2010, the Toyota models had lost ground, or more ground, to their Honda rivals. The average values of 2- to 4-year-old used Camrys were $881 less than similar Accords. The average values of 2- to 4-year-old Corollas were $1,488 below the values of similar Civics.

Ricky Beggs, managing editor of Black Book, a used-car guide company that publishes prices daily, says he has not seen a decline in dealers' interest in nonrecalled Toyota vehicles being sold at auction. Nor has Beggs seen a drop in the brand's vehicle transaction prices.

"It's way too early to make an adjustment on residuals," he says. "We don't know what the fix will be" for the vehicles' gas pedals.

Gauging market prices for the recalled used vehicles was difficult in part because auction sales of those cars and trucks had been halted. But Juan Flores, director of vehicle valuation at Kelley Blue Book, says he expects some softness in the retail value of recalled new and used vehicles as soon as they go back on sale again.

Read more: http://www.autonews.com/article/20100201/RETAIL04/302019904/1132#ixzz0eIKeESkd

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toyots resale started diving awhile ago. whoring half a million camrys out on 199 leases that come back in 2-3 years, can you say flood the market?

supply and demand. and a product that is in that much supply, becomes a commodity.

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