Toyota owners wonder what comes next as values drop

Toyota owners wonder what comes next as values drop
Kelley Blue Book has downgraded its assessments of recalled Toyotas and sellers are finding interest has dried up, even for cars not recalled
By Julie Wernau and Kiah Haslett
Copyright © 2010, Chicago Tribune
February 10, 2010
http://www.chicagotribune.com/business/ct-biz-0211-toyota-value--20100210,0,7143375.story


Kevin Duffy is kicking himself. A new dad, the 25-year-old Jefferson Park resident no longer needs his 2005 Toyota Camry Solara convertible; so, several weeks ago, he listed it on Craigslist.

Interested buyers called and he considered offers but didn't accept any. Then came the Toyota recall news, and interest in his car dried up. "The last two weeks, I haven't gotten a call or an e-mail at all."

Although Duffy's car isn't one of the more than 8 million Toyota vehicles being recalled for sticking gas pedals, faulty brakes or concerns about floor mats, it suddenly doesn't seem as hot as it used to be.

"I'm just going to end up keeping it and paying $350 a month on a third vehicle I don't even use," Duffy said.

The Toyota brand has long served owners well at sales or trade-in times. But the Kelley Blue Book, considered the value bible for anyone looking to sell a vehicle on the open market, has downgraded the value of recalled Toyotas multiple times in the last week, including the once-coveted 2010 Toyota Prius, the most popular hybrid on the market.

With newer Corollas now being investigated for steering wheel problems, consumers are steering clear of Toyotas, unsure what models could be next on the recall list. Before the recall, about 18 percent of Kelley Blue Book users requested quotes for new cars from Toyota dealers, according to a KBB analyst. Since then that number has dropped to just 11 to 12 percent despite assurances from Toyota dealerships and eBay that vehicles subject to the recalls have been repaired and inspected before being listed for sale.

"We've made it very clear to our customers that our cars are good to go," said Bob Loquercio, owner of Chicago North Side Toyota Scion. Cars have paper trails showing that the fix has been made, he said.

"Sales have significantly declined, but they haven't dried up to non-existent."

Loquercio said customers have come in expecting deals because of the recalls. And consumer surveys indicate Toyota may have a long road ahead in restoring its brand image.

Jeremy Anwyl, CEO for auto consumer information site Edmunds.com, said Toyota hit a record low on Jan. 28, with only 9.7 percent of new car shoppers saying they intended to purchase a Toyota. That number has since increased to 11.8 percent, he said, and has held steady but is still off 15 percent since before the first recall.

At the same time, Anwyl added, a temporary reduction in the supply of vehicles, which were locked out for repairs, helped stabilize value fluctuations.

And with affected Toyotas' trade-in values down about 10 percent, Anwyl said now is not the time to trade in a Toyota because dealers are trying to nab cars at lower prices.

Chicagoan Jennifer Sampson, an expectant mother, experienced the phenomenon first-hand recently when she tried to trade in her 2008 Prius at CarMax for a larger car to accommodate her expanding family.

"What CarMax is offering is far below Blue Book,'' Sampson said. "They said the demand's not going to be there even though it's not part of the recall. We listed it on Craigslist and hopefully maybe someone would be interested."

She set a sales price of $22,000, a little more than double what CarMax offered.

Some Toyota owners are riding out the recall storm.

Wayne Mitchell, 51, who lives on the Southwest Side and owns a 2010 Prius, said recalls are "the popular thing to do" right now. He has felt the braking sensation people have complained about in the Prius, he said. And, as someone who also owned a 2005 Prius, he said it is just a normal sensation that comes with owning a hybrid.

"I'm not going to worry about it," Mitchell said.

Karam Alani has a used 2009 Toyota Camry LE listed on AutoTrader.com. He plans on getting the car repaired and said if it remains unsold for several more weeks, he'll drop the price by $500.

"I feel like it's safe," Alani said. "People are a little concerned (now), but in a few months everything will be back again (to normal)."

Meanwhile, attorneys have seized on the Toyota recalls to line up lawsuits.

P. Tim Howard, a Northeastern University law professor leading a group of about 20 law firms in 16 states, aims to bring a national class-action lawsuit against Toyota, alleging the vehicle recalls have collectively erased between $2 billion and $4 billion in value for car owners.

Melanie Muhlstock, an attorney with Parker, Waichman and Alonso LLP's New York office and a Loyola University School of Law alumna, is working on suits in four states seeking remedy for economic harm to owners caused by the decreased value of their vehicles.

Several lawsuits seek to expand the recall's scope based on their analyses of National Highway Traffic Safety Administration complaints by Toyota owners.

"Of all the vehicle models and model years for which there are reported sudden acceleration events, only 43 percent of them were included in the recalls," said David Wright, a Redlands, Calif., attorney. He has five clients who claim they experienced similar problems in Toyotas that aren't part of the recall.

The Los Angeles Times contributed to this report.

jwernau@tribune.com

xtxkhaslett@tribune.com