Study: Recalls Don’t Hurt Used-Car Value

High-profile recalls such as this year's callback of 2.6 million General Motors Co. cars for faulty ignition switches don't hurt depreciation rates for the affected vehicles, says Black Book, a provider of used-car pricing trends and risk analysis data.

The publication's white paper released earlier this month challenges the premise of hundreds of lawsuits filed against GM and other carmakers that demand compensation for lost value of recalled vehicles.

Black Book's analysis studied residual values of vehicles involved in four recalls:

• Toyota Corolla sedans for sudden acceleration

• Ford Explorer SUVs for defective Firestone tires

• Chevrolet Cobalt small cars for faulty ignition switches

• Ford Escape crossovers for engine fires

In the case of the midsize Toyota Corolla, depreciation was slightly less for recalled 2008 and 2009 models (3% and 3.6%, respectively) than for the midsize car segment in which they compete (3.5% and 3.6%, respectively).

Results were similar in the Ford Explorer recall that began in August 2000 and eventually replaced some 19.5 million tires. Black Book says 3-year-old Explorers depreciated 2.7% in September-November that year compared with a 6.3% rate for 3-year-old models over the same three-month period a year earlier.

In the case of Chevy Cobalt sedans recalled last February, the analysis says the value of 2005 and 2006 models actually increased 1.4% and 1.1%, respectively, during the first half of the year.

Finally, Black Book's analysis of the recalled 2013 model Ford Escape concludes that the depreciation rate of affected vehicles is "part of seasonal patterns, not as a result of the recall."

The report's conclusion: "Recalls typically do not adversely impact normal retention patterns of a vehicle" in either the short or long term.