CTS Corp. and Automakers and Suppliers and Auto Industry and Toyota and Manufacturing & Technology

Analyst: Recalled Toyotas likely won't face long-term resale hit

January 29, 2010

The recall of several Toyota models for sticking accelerator pedals raises the question of whether customers who bought them due to a perception of quality, prior to the recall, now will be burned when they go to sell them.

Probably not, “as long as it continues to be handled very transparently” by Toyota, said Tom Kontos, executive vice president of customer strategy and analytics at Carmel-based Adesa Auction Services, the nation’s second-largest used-vehicle auction chain

One reason is that Adesa and some of its competitors have pulled the affected Toyota vehicles from auction until the problem is resolved.

If not, buyers likely would expect to buy them at auction at a lower price.

“To the extent you halt the transactions you don’t run the risk of damaging a vehicle’s value,” said Kontos.

That Toyota plans to reimburse dealers for eventual repairs also will help to hold vehicle values, he added.

For now, not only has Adesa temporarily pulled the affected Toyota vehicles from auction but is having them transported by flatbed truck rather than driven to auction sites as a safety precaution for its employees.

Kontos said he hasn’t seen anything like the Toyota situation since the firestorm nearly a decade ago involving Firestone tires that were blamed for causing a rash of Ford Explorer rollovers. In that case, the tire tread separated.

Ford agreed to replace the tires free of charge. Values of Explorers at auction fell, although it may have had as much to do at that time with a glut of used sport utility vehicles coming off lease, Kontos said.

Toyota is suffering from a stream of recalls, however. In addition to the recall announced this week of 2.3 million U.S. vehicles, last September it announced a 3.8-million vehicle recall to secure floor mats that could jam the accelerator pedal.

In the last several years the Japanese automaker has announced recalls involving its Tundra full-sized pickup for problems including frame rust, a defective camshaft on V-8 engines, and separating rear propeller shafts.

The recall announced this week on some of its most popular vehicles involves gas pedals manufactured for Toyota by Elkhart-based CTS Corp.

Affected are certain Avalon, Camry, Corolla, Matrix, Highlander, Tundra and Sequoia models.

ADVERTISEMENT

Recent Articles by Chris O'Malley

Comments powered by Disqus