If you think Toyota is still reeling from negative opinions stirred up by the company's rash of recalls in 2009, North Carolina State University has some news for you. According to a new study conducted by researchers at the institution, the recalls had "little to no impact" on how buyers see the Japanese automaker. Robert Hammond, an assistant professor of economics at NCSU, says the research specifically looked at the used car market to negate the impact of outside factors like incentives, marketing campaigns and models not associated with the recall to begin with.

The idea was that examining average prices of models affected by recalls associated with sudden acceleration would give researchers an idea of how willing buyers were to pay for the vehicles. Overall, used cars covered by the recall campaigns saw their price decline by a mere two percent. The figure is within the statistical margin of error for the study.

So, what's behind the slow in Toyota sales? Despite an abundance of fleet sales last month that saw the company's figures swell by 7.5 percent over January 2011, Toyota still fell well behind the industry average. With production back on track after last year's earthquake tragedy, the company may have some explaining to do. Hit the jump for the full press release.
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Toyota Recalls Made No Dent On Their Brand

For Immediate Release

A study from North Carolina State University shows that Toyota's safety-related recalls that began in 2009 made little to no impact on how consumers perceived the brand.

"These findings highlight the importance of establishing and maintaining a reputation for quality," says Dr. Robert Hammond, an assistant professor of economics at NC State and lead author of a paper describing the study. "Not only will it help you sell cars in the first place, but it will help you weather public scrutiny in the event of a recall."

Hammond's findings highlight the importance of a well-established reputation.

Hammond launched the study because he wanted to see how consumers respond to recalls. "I wanted to look at how a product recall for safety would affect what a consumer is willing to pay for that product," Hammond says. He looked at Toyota models that were subject to recall in 2009-2010 as a result of highly publicized concerns over "sudden unintended acceleration." Those recalls applied to over 9 million vehicles worldwide.

In order to focus on consumer perception of the brand, Hammond looked at used-car markets. Sales of new vehicles can make it difficult to assess the impact of a recall, because there are multiple confounding variables – such as promotions, marketing campaigns and new models that weren't subject to the relevant recall.

But by looking at the average prices for specific models in the used-car market, researchers can determine how much Toyota owners were willing to accept when selling their vehicles – and how much used-car buyers were willing to pay for them.

Hammond found that, despite the high-profile media coverage of the Toyota recalls, there was very little effect on what consumers were willing to pay for a Toyota. Specifically, Hammond found that the average price of affected vehicles declined by approximately 2 percent relative to comparable, unaffected vehicles (such as similar Honda models). That 2 percent decline is within the statistical margin-of-error for the study.

And the effect did not last long. The first Toyota recall was in November 2009, and the apparent decline in vehicle price had leveled out by January 2010.

Hammond did a similar analysis of Audi vehicles that were recalled due to similar acceleration concerns in 1986. The impact there was more significant. Audi showed an average price slide of over 16 percent relative to similar, unaffected vehicles over the course of six months. "Comparing the Toyota and Audi experiences highlights the value of a well-established reputation," Hammond says.

The paper, "Sudden Unintended Used-Price Deceleration? The 2009-2010 Toyota Recalls," is forthcoming from the Journal of Economics and Management Strategy.


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  • 34 Comments
      Lightbulb101
      • 2 Years Ago
      I'm not sure that recalls would hurt sales. I think it is just a single bad experience or just bad word of mouth that would hurt more than a few recalls. At least with recalls the company will fix your cost with no cost to you
      bengtl
      • 2 Years Ago
      Eh. They studied only used cars. People associate old Toyotas with the old reliable reputation and the new cars with the new reputation. Autoblog should be ashamed of itself for the demonization of Toyota when there wasn't even proof.
      dontneedpants
      • 2 Years Ago
      Lack of real-world impact (sticky pedal recall in particular) probably had a lot to do with this.
      Renaurd
      • 2 Years Ago
      Toyota has never been any better than other cars, their owners simply brag the loudest and Toyota kisses more media ass.
        techie69
        • 2 Years Ago
        @Renaurd
        Of course, somebody like you who isn't in Q.C. wouldn't understand how they achieve such levels of quality or kind of commitment to attain such nonconsequential effects on their product. I am sure your favorite recalled brand fails to take austere measures from top to bottom as a company so you got to blame it on something or someone else.
      :)
      • 2 Years Ago
      They only people it hurt where the 34 killed in sudden acceleration accidents that have been proved so far. Just a shame. Great job Toyota hope you are proud.
      carboy55
      • 2 Years Ago
      Everyone knows a die-hard Toyota owner. And I guarantee you 98% of us would add, "yeah, and (s)he knows NOTHING about cars." Toyota makes a killing from people who don't mind driving a boring appliance.
        Phil B
        • 2 Years Ago
        @carboy55
        While I totally agree with your statement, I guess my father falls into that 2% group....save for a POS Chevy Astro that refused to play nice, he's bought nothing but Toyotas since 1989 and has always been a major grease monkey, dragging me out into the garage on Saturday mornings whether I wanted to or not!
      Dreez28
      • 2 Years Ago
      Most people buy Toyota's because they want something reliable. Not because they really liked Toyotas. Once they owed those cars for a couple years and a 50k+ miles, they realized that they really weren't as reliable as hyped. Now people are actually starting to go back to buying cars they actually like, becuase it's fairly safe to say in todays automotive world, that in terms of quality and reliability, it's a pretty level playing field. Cars are complex machines, they're gonna break down. A lot of people are also too ignorant to understand that ALL cars require regular maintenance. And if you don't take proper care of it, it don't matter what it is, it's going to break down. Moral of the story...buy what you like, and if you want it to last a long time, take care of it. There isn't anything special about a Toyota, in my opinion they're one of the most boring brands I can think of.
        GearHeadDeals.com
        • 2 Years Ago
        @Dreez28
        I would say you are right in terms of cars (that aren't Priuseseses), bit for trucks Toyota has a great association with the tacoma, 4runner and tundra. These vehicles are known for reliability.
          Dreez28
          • 2 Years Ago
          @GearHeadDeals.com
          I agree that Toyota has had models that are known to be very reliable. I would counter however, that most every brand has some models that are known for reliability, and some models that were huge pieces of feces.
        • 2 Years Ago
        @Dreez28
        [blocked]
      dukeisduke
      • 2 Years Ago
      Can you say, "short attention span"? Sure, I knew you could.
      Basil Exposition
      • 2 Years Ago
      I don't really care what this study says. Before the recall, the perception was that Toyotas were perfect and untouchable - head and shoulders above every other make. That's not the case any more. Now, they are known as well made cars on par with other quality manufacturers, but not invincible.
        carnut0913
        • 2 Years Ago
        @Basil Exposition
        I agree to a point. By only looking at used car sales of models affected- he is only looking at a certain demographic. Most who are going to buy a used Toyota are going to assume that the recall issue will be addressed, and not necessarily looking at long term but price. Real world- It opened doors on competitors sales floors. I know some Toyota owners who switched when they saw what they could get elsewhere for the same dollars. Many also stayed with Toyota.
      BlackDynamiteOn
      • 2 Years Ago
      Toyota is still The People's Champion..... BD
        Titansfan1967
        • 2 Years Ago
        @BlackDynamiteOn
        Not with 48 percent going fleet. I think that Toyota is trying to say they are not reeling but they have some issues. People who are shopping realize how much Toyota cuts corners. For example they brag about technology but entune is an app 3 years it is free then you have to pay $15.00 dollars a month.
      hudkina
      • 2 Years Ago
      How is this news? Hasn't it long been established that drivers of Toyota follow the brand with cult-like reverence. How else can you explain buying a Corolla? In any case, the only thing I think the recalls did was knock Toyota's perception down to where everyone else stands. In other words, Toyota doesn't make "bad" cars anymore than Toyota makes cars that are no better or worse than the competition.
      • 2 Years Ago
      [blocked]
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