Toyota Residuals Increases Along with Rise in Industry

IRVINE, Calif. - According to Kelley Blue Book Values data to be published in the company's May/June Residual Value Guide, the average year-over-year change in 36-month residual values of new Toyota models is forecasted to increase by 4.2 percentage points (based on the vehicles' MSRP).

While Toyota's increase is below the industry average increase of 6.2 percentage points, it still outperforms a number of other brand increases. Year-over-year changes in residual values in the May/June release are largely being driven by changes within the vehicle segments.

Kelley Blue Book lowered its outlook on current used Toyota vehicle values in early February, with affected models dropping anywhere from 1-3 percent depending on the model.

In early March, Toyota began offering various incentives to bring consumers back to the brand. Toyota's recall, lingering in the press and the introduction of these incentives raised questions about Toyota's residual values. According to Kelley Blue Book analysts, shifts in incentive spending often impact current used-car values much more than future values otherwise known as residual values.

At this time, Kelley Blue Book's residual analysts do not believe that the company will make zero percent financing a permanent fixture and therefore values will not be impacted greatly three or four years from now.

"Incentives offering lower interest rates have less of an impact on future values than cash incentives," said Eric Ibara, director of residual value consulting, Kelley Blue Book. "Attractive lease payments can increase market penetration for certain models and create a larger volume of lease returns for the banks in the end. What remains to be seen is the larger volume of leases Toyota's incentives create, as the volume is what will have a detrimental impact on future residual values."

Toyota's recent attractive incentive offers appear to be driving a rebound in consideration according to Kelley Blue Book Market Intelligence data. Seven percent of car shoppers say they were not considering a Toyota prior to the incentive announcements, but now they are. In addition, the week-over-week percentages of consumers who say they would never consider a Toyota again, decreased (from 17 to 13 percent).