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Value of Used Toyotas May Slump After Recall

Posted: Feb 02, 2010 10:55 a.m.

Once Toyota has fixed your accelerator pedal, you’re in the clear, right?  Not quite.  The stellar reliability reputation and solid resale value of Toyota products over time has made Toyotas a solid investment for millions, but the damage from the company’s high-profile troubles could impact more than just the automaker’s bottom line – it could hurt the value of your car.

The Detroit News reports, “Toyota's resale values long have been the envy of the automobile industry. Many customers say they buy Toyotas because they know they will hold their value. The same high resale values have allowed the Japanese automaker to offer lower lease rates, too.”  

So far, the Indianapolis Star reports, “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.” 

The dip in Toyota resale value could be a short-term problem.  Joe Spina, an auto analyst with Edmuds.com, told the News “three years from now these things will balance each other out. Three years from now, there's going to be a shortage of those vehicles coming off lease. It's going to help the prices of the cars that are going across the auction block.”  But the used car value analysis firm Kelley Blue Book “said it anticipates some ‘incremental softening’ in the current value of some used Toyotas.” 

That pattern – a short-term dip in value followed by a longer-term recovery – is something Toyota owners need to be aware of.  Jack Nerad, Executive Market Analyst for KBB, warns owners who might be looking to trade in their Toyota now to be cautious.  “While dealers are savvy about these things and understand that the car can still be re-sold once proper repair has been identified, they might be reluctant to accept the vehicle in trade, or offer a lower price for it than would otherwise be the case," he says.  Dealers may hope to offer less than a Toyota trade-in is worth, hold onto it until the value recovers, and sell it at a profit. 

If you're in the market for a new car, check out the U.S. News rankings of this year's best cars as well as this month's best car deals.