KBB and NADA Used Vehicle Value Guide Books Lower Toyota Vehicle Values

By Brendan Moore

02.07.2010

Toyota logo-smallNADA Used Car Guide and Kelley Blue Book, the two most popular used vehicle value guides for consumers, and two of the most often used wholesale vehicle pricing guides used by dealers and lenders, have both announced that they are dropping values for Toyota models affected by the current recall.

Black Book, a used vehicle guide used only by entities in the trade like auction buyers and used car managers has already seen it’s pricing for the affected Toyota models drop.

NADA Used Car Guide, used virtually by every dealer in every state, has dropped the wholesale (loan) values of used Toyotas a little over 3%. The retail values will drop a corresponding amount.

Just as a note to consumers, the NADA book that you can purchase at Barnes and Noble or Borders lists only the retail value amounts of vehicles; there is a different edition of the book printed that contains both wholesale and retail values that is only available to lenders like banks and credit unions, and, of course auto dealers of every stripe.

The company’s statement is: “NADA’s position is to lower numbers on most Toyota models in the short-term towards the lower range of prices that we have seen in the auctions. If we see significant downward movement in Toyota’s prices next week, it will be incorporated in NADA values since we expect the downward shift to last until the recall issue is completely resolved.”

Kelley Blue Book (KBB) has also lowered the values of Toyotas around 3%. KBB, although it enjoys high name recognition among consumers, is not used by most dealers or most lenders in most parts of the United States for determining used vehicle values.

It was only a short time ago in December of 2009 that Kelley Blue Book issued a press release stating that Toyota had the best resale value of any make.

As a real-world example of what the new pricing means in the market, a 3% hit in value to a $15,000 USD used car means a price drop of $450.

The factors driving the prices of used Toyotas down are simple; consumer demand for used Toyota vehicles has dropped off a cliff, and will continue to languish at least until the recall issues are resolved; and, the inability of dealers and dealer auction companies to sell any of the used Toyota models affected by the recall. These two factors have combined for an effective one-two punch to Toyota’s jaw in the market.

It is worth pointing out that the 3% drop could only be a temporary shift in pricing for used Toyotas; a quick resolution to the ongoing recall that has a positive perception among the public would restore most, if not all, of Toyota’s previous luster in the area of residual value.

However, in what could be an ominous development for Toyota, ALG (Automotive Lease Guide), a company most consumers have never heard of, but, which functions as THE source for vehicle leasing companies in setting future residual values for vehicles, is stating that it appears that Toyotas will lose approximately 5% of their previous residual values going forward.

ALG, in December 2009, awarded Toyota “segment awards” in their 11th Annual Residual Value Awards ranking, with the Sequoia taking the honors in the Large Utility Vehicle segment; the Tacoma garnering the award in the Compact/Midsize Pickup segment; and the Prius taking home the award for the Hybrid/Alternative Powertrain segment. In addition, Toyota’s Lexus division – the runner-up (Acura was the winner) for ALG’s Luxury Brand Residual Value Award – received two segment awards, for the Lexus LS (Luxury Car) and the Lexus RX (Near Luxury Utility Vehicle).

The precipitous drop in resale value of their cars is merely adding to the pain Toyota is sustaining these days. The company has recalled 8.1 million vehicles worldwide since last fall for unintended acceleration issues, and their reputation for quality and durability is under siege. Toyota is also now the subject of two separate congressional investigations in the United States, centering on what they knew about their vehicles’ safety deficiencies and when they knew it.

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Author: Brendan Moore

Brendan Moore is a Principal Consultant with Cedar Point Consulting , a management consulting practice based in the Washington, DC area. He also manages Autosavant Consulting, a separate practice within Cedar Point Consulting. where he advises businesses connected to the auto industry. Cedar Point Consulting can be found at http://www.cedarpointconsulting.com.

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