Toyota's perceived quality took a serious hit last spring amid news of massive recalls but is bouncing back, according to a study that measures consumers' perception of brand quality. That improvement is pushing the brand's residual values up.
ALG -- formerly Automotive Lease Guide, which sets residual values for the auto industry -- says Toyota's score of 70.7 in its fall 2010 Perceived Quality Study is a 4.5 percent increase over its score of 67.6 in the spring 2010 study.
But the brand is still well below its fall 2008 score of 83.0.
Toyota's spring 2010 score tumbled 20 percent from its fall 2009 score. It was "the biggest drop we'd ever seen in back-to-back surveys," says Eric Lyman, director of ALG's original equipment manufacturer practice.
Perceived quality affects shoppers' consideration of a brand's model line and is a factor in how much they are willing to pay for a vehicle. The semiannual study is based on a scale from 1 to a high of 100.
ALG expected Toyota to bounce back, but at a slower pace, Lyman says. It had forecast that Toyota's score would recover about half of its loss by the spring 2013 survey and all of the loss by the fall 2014 survey.
The fall score "was ahead of our initial assumption," Lyman says.
The steep drop in Toyota's perceived quality last spring prompted ALG to lower the brand's 36-month residual value forecast by about 1 percentage point, Lyman says.
For example, ALG cut $175 off the expected resale price in May-June 2013 for a 2010 Toyota Corolla LE sedan with an original sticker price of $18,000, including shipping, to a projected $9,825.
ALG has restored about a third of that percentage point in the brand's across-the-board 36-month residual forecast. The actual numbers vary by model and trim level.