NADA Used Car Guide Expects Used Toyotas to Continue Moderate Price Declines
McLEAN, Va. — When drilling down to see how Toyota vehicles are performing at auctions throughout the country, NADA Used Car Guide found that since January, prices for these models have underperformed competitive products by a "dramatic amount."
More specifically, Jonathan Banks, of NADA Used Car Guide, pointed out, "For example, in the case of the Camry, these vehicles have lost approximately 10 percent of their price competitiveness to competitive models, while on a brand level, Toyota has lost 7 percent of its price advantage relative to Ford."
Basically, it has been about six weeks since Toyota announced its major recall. While much of the daily media coverage of this issue has subsided, NADA Used Car Guide officials say "the sage is far from over."
For instance, Toyota has brought back zero-percent financing on high-volume models, which pumps up an incentive trend that had started in the third quarter of last year.
"These events have stirred up many questions on what the impact will be on auction performance and residual values for Toyota products as consumer uncertainty and new-vehicle incentives will put downward pressure on used-car prices," officials indicated.
Moreover, NADA Used Car Guide noted that Toyota's incentive spending has prompted responses from domestic and import competitors, which is leading to a dramatic increase in sales and ultimately points to "a continuation of incentive spending and more pressure on auction prices for both Toyota models and substitute products."
Banks said, "Although it is difficult to isolate the impact the recall has on auction prices, especially since Toyota incentives have increased by about 20 percent from January to February, there is no doubt that Toyota values are lagging behind the competition. Honda, for example, has implemented a more aggressive incentive program than Toyota by increasing average incentives by over 25 percent from January to February, but still outpaces the price performance of comparable Toyota models."
He went on to say, "This is expected to mitigate some of the expected positive seasonality which normally occurs during the spring market."
Looking forward, Banks said NADA Used Car Guide is forecasting a strong used-vehicle market for the next few months, which will likely help offset some of the decline in auction prices for Toyota models.
However, Banks stressed, "But with incentives for Toyota models increasing during March, auction volume increasing and the continuation of negative press, it is likely that Toyota prices will continue to slip against primary competitors."
Ultimately, he expects that Toyota prices will "continue to follow moderate declines while strength in the overall market will continue."
NADA Used Car Guide based its analysis on data from the National Auto Auction Association, which represents about 80 percent of the transactions going through auctions.