Kelley Blue Book says it will further decrease its used-car values on recalled Toyotas. The company updates values on a weekly basis. Last Friday, it initially decreased the used-car values of recalled Toyotas by 1 to 3 percent in response to the slowing demand.
This coming Friday, it will cut values on these models by an additional 1.5 percent "on concerns around the growing supply of unsold Toyotas on both dealer lots and at auctions," says Juan Flores, director of vehicle valuation at Kelley Blue Book. "At this point, it's clear that the market is shifting away from these Toyota products right now, allowing us to project their lowered values. In the coming weeks there will be much more data available on the sale of used Toyotas and any shifts in demand, which will provide greater insight into how the values of these vehicles might be affected in the future."
Last week's reduction lowered values by $200 to $500 per vehicle. The next cut will take them down by a total of $400 to $1,000, with the more expensive models taking the biggest hit, says Kelly spokeswoman Robyn Eckard.
Edmunds.com says that trade-in values on recalled Toyotas have fallen as much as 10 percent, but predicts they will bounce back. "Dealers are taking them from consumers at a lower price even though many of them will generate a higher profit margin for dealers in a few weeks after the recall issue is resolved," Edmunds analyst Joe Spina says. "We anticipate that any backlash will be short-lived."
Edmunds estimates that dealers are chopping their trade-in values by a larger percentage than they are cutting their retail prices. For example, it estimates that dealers are paying 6.1 percent less for a 2009 Toyota Corolla LE four-door sedan ($11,233 versus $11,963) but have dropped their retail price on the same model by only 3.5 percent ($14,161 versus $14,669).
Meanwhile, the National Automobile Dealers Association also reports that wholesale and retail values are falling, especially for the newer recalled vehicles. "NADA's analysis of last week's auction performance for Toyota was largely inconclusive at this time, however volumes were down on newer models and there was some above average softness in prices on newer models (2008 and 2009)," it reported on Friday. "On the retail side Toyota has also shown some early softness with prices dropping by slightly over 3 percent compared to a slight increase in retail prices for Honda models."