Toyota Dealers Start Dropping Prices As Recalls Hurt Reputation (TM, F)

Toyota Motor Corp.’s (ADR) (NYSE: TM) cars used to command, and get a premium over prices of cars from rivals such as Ford (NYSE: F) and General Motors on the back of a long, and carefully nurtured reputation, and brand image of high quality.

Now, the Wall Street Journal reports that some Toyota dealers have started offering discounts, in the wake of the recalls of millions of cars due to faulty brakes, and other parts, which has severely damaged the company’s reputation.

There was a time when Toyota cars used to command a premium of over $1,000 to $2.000 over cars in the $10,000 to $20,000 bracket, over rival brands, thus helping the company reap heavy profits as rivals struggled with losses, and even bankruptcy.

Now that the company is under fire for recalls and quality issues, it is on the defensive, and faces lowered sales.

Some analysts say that the price of a brand new Camry could down by $500 to $1,000 in the wake of the recalls, with a Prius hybrid being available at a discount of $1,000 to $1,500.