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Toyota seen readying global Prius recall

Source: Reuters - Mon 8th Feb 2010

Toyota Motor Corp is preparing a recall of its new Prius hybrid car in Japan as early as Tuesday, followed by similar steps in the United States, Europe and other markets, a source familiar with its plans said.

Toyota, which has earned a reputation as the green-vehicle front-runner with the fuel-sipping Prius, has said it is discussing with safety authorities worldwide how to fix a software glitch that delays braking on the model in certain road conditions.

Toyota President Akio Toyoda apologised on Friday for a separate series of recalls covering more than 8 million vehicles, saying the company was rushing to reach a decision on the Prius as it seeks to restore consumers' confidence in the brand.

Toyota has come under intense scrutiny, with U.S. safety authorities and members of the Obama administration accusing it of responding too slowly on problems related to uncontrolled acceleration that have been linked to up to 19 crash deaths in the United States over the past decade.

An announcement to recall the Prius, cumulative global sales of which total more than 300,000 units, will likely come from a filing with Japan's Transport Ministry on Tuesday, followed by plans elsewhere, the source said.

The Prius was Japan's top-selling car in 2009 and is arguably Toyota's most important model, as car makers around the globe prepare for a new era in low-emission vehicles.

"We think (Toyota's) start of efforts to resolve quality problems is a step forward in terms of regaining investor confidence" JPMorgan auto analyst Kohei Takahashi said in a report, referring to Toyota's announcement on Friday to set up a committee to review its quality controls.


Toyota will likely announce a recall of the 2010 Prius as early as Tuesday, said the source, who asked not to be identified before an official announcement.

The recall could also include the Toyota Sai and its sister model under the premium Lexus brand, HS250h, which debuted last year and use the same brake system as the third-generation Prius.

A Toyota spokeswoman said the company was still discussing plans with safety authorities in the United States and Japan. The new Prius model is sold in some 60 countries.

The Sai sedan is the second hybrid-only model under the Toyota brand, and the HS250h is the automaker's first dedicated hybrid model under the Lexus brand.

As of the end of December, Toyota sold 15,500 HS250h cars globally since its release in July. Sales of Sai, a Japan-only model released in December, came to 3,800 units in the first month, Toyota said.

U.S. competitor Ford Motor Co said last week it was fixing up to 17,600 hybrid sedans for similar braking problems.

Toyota shares fared better on Monday than other Japanese auto stocks, which were hit by a stronger yen. The stock fell 1.1 percent, compared with a 2.1 percent drop in Honda Motor shares and a 2.6 percent loss in Nissan Motor. The broader Tokyo market fell 1 percent.

On Friday, Toyota's U.S.-listed shares jumped 4 percent following the news conference by the President Toyoda.

The stock has lost more than a fifth of its value since the world's biggest automaker expanded a recall related to unintended acceleration to millions of vehicles globally.


In addition to the cost of repairing the vehicles, Toyota faces a rise in indirect spending, including from a likely rise in lawsuits.

At least 30 class-action lawsuits have been filed against the Japanese automaker in the United States, as law firms across the nation call out to consumers to capitalise on Toyota's vehicle defects.

San Diego law firm Steiner & Associates, for one, has a website up and running that asks: "Have You or Loved One Been Injured or Killed in an Accident Due to a Defective Gas Pedal or Floor Mat? You may be entitled to substantial compensation!"

Toyota had skirted a full investigation into unintended acceleration of its vehicles and faced a risk of more recalls, according to a consumer advocate set to testify this week in a U.S. congressional probe over safety issues.

"I suspect that we are going to see a series of recalls appear over a period of time here, certainly over the next year, and they are going to address varying issues and varying vehicles" said Sean Kane, founder of the Safety Research & Strategies Inc, a consumer safety group.

Toyota has said it found no evidence of any safety problems beyond those covered by recalls under way.

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