Why Used Toyotas And Hondas Are So Expensive

Why Toyota and Honda Dominate Resale Value in a Changing Auto Industry

Author

Ark
May 29, 2025

Toyota and Honda, two of the world’s largest automakers, aren’t known for flashy designs or high-end exotics. In fact, they’ve often been labeled as “boring”—a” reputation so pervasive that Toyota’s chairman once demanded “no more boring cars,” and Honda’s own designers have acknowledged the perception. Yet, despite this image, Toyota and Honda dominate the used car market, consistently holding their value better than any other brands. Their luxury divisions, Lexus and Acura, follow suit. But what makes these brands so resilient in resale value, and can they maintain their edge in an era of electric vehicles (EVs), software-driven cars, and rising competition from Chinese manufacturers?

A Track Record of Resale Dominance

Toyota has topped Kelley Blue Book’s Best Resale Value list eight times since 2014, including the last four consecutive years. Lexus, its luxury arm, has won the luxury category five times, securing its third straight win in 2024. Honda and its premium brand, Acura, are close contenders, often neck-and-neck with Toyota and Lexus in rankings from Edmunds and J.D. Power. According to J.D. Power’s residual value awards, Lexus leads the luxury segment, while Honda frequently outranks Toyota among mainstream brands.

The secret to their success lies in a combination of disciplined manufacturing, strong brand reputation, and strategic market practices. Unlike many competitors, Toyota and Honda avoid tactics that erode resale value, such as heavy incentives, fleet sales, and over-reliance on leasing. These strategies, while effective for boosting short-term sales, often flood the used car market with discounted vehicles, driving down prices.

Why Toyota and Honda Hold Their Value

Avoiding Incentives and Fleet Sales

Many automakers rely on incentives to move inventory, but these discounts can devalue a car the moment it leaves the lot. Toyota offers minimal incentives, and Honda spends about 23% less on them compared to industry rivals. This restraint preserves the value of their vehicles in the used market. As a result, when a Toyota or Honda is traded in, dealers don’t assume it was purchased with a steep discount, leading to higher trade-in values.

Fleet sales, such as bulk deals to rental companies or government agencies, are another value killer. About 14% of Toyota’s sales are fleet-related, but Honda’s are just 1.8%—far lower than competitors like Ford, Chevrolet, and Chrysler. Fleet vehicles often come with fewer features and are sold at discounted prices, which drags down a brand’s overall resale value. By minimizing fleet sales, Toyota and Honda keep their used car prices strong.

Low Inventory, High Demand

Toyota and Honda maintain tight control over inventory, ensuring dealers have enough cars to sell but not so many that prices drop. This is measured by “days” supply”—the number of days it takes to sell a dealer’s inventory. Lexus, Toyota, and Honda consistently have the lowest days’ supply among major brands, meaning their cars sell quickly. For example, Toyota’s days-to-turn (the time it takes to sell a car) is the lowest among mainstream U.S. brands, with Honda close behind, just edged out by Subaru.

This disciplined approach stems from Toyota’s renowned production system, often called “lean manufacturing” or “just-in-time” production. Nothing is built until there’s demand for it, reducing waste and preventing overproduction. Honda follows a similar philosophy, ensuring inventory matches consumer demand without flooding the market.

A Reputation for Quality, Durability, and Reliability

Toyota and Honda have built stellar reputations for quality, durability, and reliability (QDR), a cornerstone of Toyota’s corporate culture. This reputation isn’t just marketing — it’s backed by data. In Consumer Reports’ reliability rankings, Lexus and Toyota consistently take the top spots, with Honda and Acura often in the top five. In 2024, Consumer Reports began ranking 5- to 10-year-old used cars, and Toyota and Lexus topped that list as well. J.D. Power’s dependability study further reinforces this, with Toyota and Lexus frequently leading.

This reliability translates into real-world longevity. Stories of Toyota and Lexus vehicles surpassing a million miles, while rare, highlight their durability. Consumers are willing to pay a premium for vehicles they trust won’t break down, boosting resale values. Hybrids, a segment where Toyota and Honda excel, also hold value exceptionally well. A 3-year-old hybrid retains 72% of its value, compared to 65% for gas cars and just 44% for EVs. With hybrids selling in just 26 days compared to the industry’s 58-day average, demand remains strong.

The Toyota Production System: A Competitive Edge

Toyota’s manufacturing prowess, rooted in its production system, sets it apart. Known as a “pull system,” it aligns production with demand, minimizing excess inventory. On the factory floor, any employee can stop the assembly line by pulling a cord if they spot a defect, ensuring issues are caught early. Standardized designs across models reduce costs and allow Toyota to perfect components over time, enhancing quality. The company also invests heavily in training workers and engineers in problem-solving, further strengthening its QDR focus.

Honda shares a similar commitment to cost control and customer-focused design. Both brands avoid adding unnecessary features that don’t align with consumer demand, reducing production costs and maintaining reliability. However, this conservative approach can make them slower to adopt new technologies, a point of criticism in the rapidly evolving EV market.

Challenges and Blemishes

Despite their strengths, Toyota and Honda aren’t flawless. A recent scandal in Japan involving falsified safety check data has implicated both companies. Honda announced a recall of 750,000 vehicles in February 2025 due to faulty airbags, while Toyota is replacing engines in over 100,000 Tundra, Lexus LX, and Tacoma vehicles due to transmission and engine issues. These major component failures could dent consumer confidence, though their long-standing reputations may cushion the blow.

The transition to EVs has been another challenge. Toyota, a pioneer in hybrids with the Prius, has been criticized for its slow move to fully electric vehicles. Only EVs, the bZ4X and Lexus RZ, have faced setbacks, including a bZ4X recall due to wheels detaching. Honda has also lagged in the EV race, prioritizing hybrids over full EVs. This caution contrasts with the rapid innovation of Chinese manufacturers, who can release new models in a fraction of the time it takes legacy automakers. Newer players like Tesla and Rivian also have an edge with software-defined vehicles, which allow remote feature updates — an area where Toyota and Honda are playing catch-up.

Can They Stay on Top?

The automotive industry is undergoing unprecedented change. EVs, software-driven cars, and fierce competition from Chinese automakers and startups like Tesla and Rivian are reshaping the market. Younger buyers, less loyal to traditional brands, are drawn to innovative, tech-heavy vehicles. Toyota and Honda’s slow-and-steady approach, while effective for reliability and resale value, risks losing ground to faster-moving competitors.

Yet, their strengths are formidable. Toyota is the world’s largest automaker, selling 40% more vehicles than rivals like Chevrolet and Ford. Its disciplined manufacturing, focus on QDR, and loyal customer base provide a strong foundation. Honda’s similar approach ensures it remains a close contender. Both companies are doubling down on hybrids, a segment with soaring demand, and their low reliance on incentives, fleet sales, and leasing keeps their resale values high.

The future is uncertain, but Toyota and Honda’s track record suggests resilience. As one industry insider put it, “I have full faith and confidence in our company that we’ll figure it out and stay focused on the customer.” By continuing to prioritize quality, durability, and customer demand, these automakers are well-positioned to navigate the challenges ahead — even if their cars aren’t the flashiest on the lot.

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