Toyota Recalls Prius, Halts Hybrid Shipments

Monday, 08 Feb 2010 10:47 PM

 

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TOKYO/DETROIT – Toyota Motor Corp said on Tuesday it would recall its flagship Prius hybrid in Japan for braking problems and that it had halted shipments of two other hybrid models to check for similar problems.

The world's largest automaker is already under fire for two other recalls covering more than 8 million vehicles worldwide due to problems with slipping floormats and sticky accelerator pedals.

Toyota is fighting to keep its reputation for quality and reliability while dealing with a potential rush of litigation for crashes linked to 19 deaths and numerous injuries in the United States over the past decade.

Criticized by U.S. safety authorities and members of the Obama administration for moving too slowly on those recalls, Toyota said President Akio Toyoda and Executive Vice President Shinichi Sasaki, in charge of quality, would hold a media briefing at 3:30 p.m. (0630 GMT) in Tokyo regarding the recall.

It will file a recall of the 2010 Prius, the world's best-selling hybrid car, "and other models" at Japan's transport ministry at 1:30 p.m. (0430 GMT), a spokeswoman said. Details will be announced at 2 p.m. (0500 GMT).

The Sai and Lexus HS250h hybrids use a similar braking system as the Prius, and Toyota said it has halted shipments at its Toyota Kyushu unit while it conducts checks to determine if a recall or fix of those models would be necessary.

The Nikkei business daily said that Toyota may halt production of the Sai and Lexus hybrids. A week-long output shutdown would amount to a combined 2,000 units at least of the two models, it reported.

GLITCH FIXED

Toyota has said it had fixed a software glitch in the anti-brake lock system (ABS) on the 2010 Prius at the end of last month, and that cars being produced now would not be subject to any recall.

Owners of the latest, third-generation Prius have complained that on bumpy roads and on ice, the regenerative brakes which help charge the vehicles electric battery appear to slip and it lurches forward before the traditional brakes engage.

U.S. automaker Ford Motor Co said last week it would roll out a software patch for consumers to address similar problems with braking on two of its hybrid models, without filing a recall.

Toyota's recall of the Prius in Japan will likely be followed by similar steps in the United States, Europe and elsewhere. The new Prius is sold in some 60 countries, with cumulative sales just over 300,000 units.

The move is also likely to raise questions about the U.S. safety authorities' delay in investigating complaints over braking on the Prius.

The U.S. National Highway Traffic Safety Administration (NHTSA) had received more than 100 complaints before opening a formal investigation on February 3, a day after Toyota made its own announcement.

Shares in Toyota, which lost about a fifth of their value since late January, were up 3 percent, outperforming a 0.4 percent fall in the Nikkei average.

"The shares fell while Toyota appeared not to be doing anything to deal with its problems. But now, the fact that they're taking concrete steps on the issue is being seen as positive," said Hiroaki Osakabe, a fund manager at Chibagin Asset Management.

"But the gains will be limited since many investors want to see the impact of the problems on U.S. car sales, with more share selling ahead if there's a big drop."

LAWSUITS

In the apparent first of a potential rush of legal claims over the Prius, the owner of a 2010 Prius has sued Toyota in Los Angeles, claiming the automaker failed to fix a brake defect and seeking a court order requiring a recall.

Daniel Warshaw, a lawyer for Pearson, Simon, Warshaw & Penny LLP, said he believes his client is the first to file a suit seeking class-action status over the braking complaints on the Prius.

"I believe there will be many other lawsuits across the country in 72 hours," he told Reuters.

Meanwhile, complaints to U.S. safety regulators about 2010 Prius brake problems have jumped sharply since the Transportation Department announced a formal investigation last week.

Several complaint files total more than 1,000 reports from vehicle owners but a partial review of the documents submitted to NHTSA found some duplicates, so the exact number is unclear. Four injuries were reported.

More bad news came when KBB, or Kelley Blue Book, said on Monday it plans to cut U.S. used-car values of recalled Toyotas by 1.5 percent "on concerns around the growing supply of unsold Toyotas on both dealer lots and at auctions."

This came after KBB on February 5 cut used-car values of recalled Toyotas by 1-3 percent.

Used-car values are a key component in car dealers' ability to set residual values -- or how much a used car will be worth 36 months after purchase -- and interest rates.

Toyota said on Monday it restarted production at six U.S. and Canadian plants "with no issues," a week after halting work.

Toyota faces further scrutiny on Wednesday when its North America chief executive, Yoshimi Inaba, testifies to Congress in front of the House Oversight Committee in Washington.

© 2014 Thomson/Reuters. All rights reserved.

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