this was all part of an assignment in my Econ class, this was my response.
a) The price used Toyota's involved in the recall will have a slight decline in retail value for awhile, until this blows over, however "older" model- used Toyota's not affected by the recall; values will remain the same. I also believe that Blue Book values [NADA, Kelly Blue Book] will stay relatively the same; declining slightly, then holding. Just because people may be more hesitant to pay that price, doesn't mean it's not worth it.
b) The price of a new Toyota will also stay close to the same. Remember, dealers purchase the vehicles direct [from Toyota], then sell to the public. The cost of production for Toyota to build a vehicle is not going to decline, therefore nor will its price. However, Toyota will experience a decline in sales, forcing the dealers to lower the price, offer incentives, and even loose money on the deal, just to unload current inventory; which may mean a drop in price [From the dealer, not Toyota] for the consumer.
c) Since only the Toyota's manufactured in North America were involved, [Japanese built Toyota's, nor Lexus, and Scion were recalled] mostly, only the U.S. and Canada will be affected. But since the cost of production for a manufacturer to assemble a vehicle doesn't go down, the competitors MSRP price won't either. However, what you will see is competitors eager to market Toyota's misfortune to benefit themselves. [e.g. GM remained at the top of worldwide vehicle sales for years, and would like to achieve that title again] I wouldn't be surprised if other car company's market their vehicles in a more completive manner, offering lower incentives such as: lower interest rates, warranties, services packages, and increasing the demand for "Toyota alternatives." But I don't expect the MSRP to decline at all.
Reply With Quote
Originally Posted by BIG WORM
