Toyota Extends Recalls to Hybrids to Repair Brakes
Toyota Motor Corp. will recall 437,000 hybrid cars globally to fix faulty braking systems on four models, including the Prius, adding to almost 8 million vehicles the company is repairing for separate defects.
The action threatens to further tarnish Toyota’s reputation as a leader in gasoline-electric hybrids, a technology it plans to offer on all models. Toyota, grappling with its worst recall crisis, has lost about $31 billion in market value since Jan. 21, when it began taking back millions of vehicles for defects linked to unintended acceleration.
“The Prius is synonymous with hybrids and therefore, given the scale, the recalls can erode consumers’ trust in these cars,” said Tatsuya Mizuno, director of Mizuno Credit Advisory in Tokyo. “The damage to Toyota is huge as the Prius was such a high profile model.”
In Japan, Toyota will call back 223,068 vehicles to repair computers in anti-lock brake systems, according to a notice filed to Japan’s Transport Ministry today. The vehicles to be repaired include 199,666 2010 Prius hybrids, 10,820 SAIs, 12,423 Lexus HS250h cars and 159 Prius plug-in hybrids, according to the filing to the ministry.
“We will redouble our commitment to quality,” Toyoda, 53, said in Tokyo today. “I would like to apologize again to our customers who are worried about Toyota’s quality and safety.”
When the latest version of the Prius came out, Toyoda called it the “future of Toyota cars.” The Prius was Japan’s top-selling vehicle last year.
Toyota has recalled almost 8 million vehicles on five continents to repair defects that have been linked to unintended acceleration. Those recalls may cut demand for the company’s vehicles by 100,000 units, Toyota said last week.
The carmaker faces at least 34 lawsuits filed on behalf of customers in the U.S. and Canada seeking a range of damages from loss of car value to a return of profits. It also faces at least 12 lawsuits brought by individuals claiming deaths or injuries caused by uncontrollable acceleration.
Moody’s Investors Services placed Toyota’s Aa1 senior unsecured long-term rating on review for possible downgrade today. Problems with Toyota cars and recalls may have “longer term impacts,” affecting pricing power and market share in key markets, Moody’s said in a statement.
The company on Feb. 4 predicted a return to profit in the fiscal year ending March 31, even as it said recalls may cost 100 billion yen ($1.1 billion). The full-year net income forecast of 80 billion yen takes into account recalls for flaws linked to unintended acceleration, though it doesn’t include potential Prius recalls, Toyota said at the time.
Toyota also said it will recall about 133,000 Prius 2010 models and 14,550 Lexus HS250h hybrids in the U.S. to update software in the vehicle’s anti-lock brake system. No other Toyota, Lexus, or Scion vehicles are involved in this, Toyota said in a statement.
Toyoda plans to travel to the U.S. and “will try to explain with my own words,” he said. Toyoda must provide a “proper report” in the U.S. and the recalls must not cause a “foreign-relations problem,” Japan’s Transport Minister Seiji Maehara told reporters today. Maehara said he will meet with U.S. ambassador to Japan John Roos tomorrow to discuss Toyota.
“Toyota is finally taking measures,” said Mamoru Kato, an analyst at Tokai Tokyo Research Center in Nagoya, Japan. “This is fueling optimism that Toyota is moving in a clear direction to avoid further consumer anxiety.”
Toyota rose 2.9 percent to 3,375 yen at the close of trading in Tokyo. The stock has declined 19 percent since Jan. 21.
The U.S. Transportation Department is also investigating reports of Prius brake failures. The department’s National Highway Traffic Safety Administration received 124 reports from consumers, including four saying crashes occurred with two “minor” injuries, according to an investigation document.
Sudden acceleration of Toyota vehicles has been linked to 19 deaths in the last decade, according to Henry Waxman, the U.S. House of Representatives’ Energy and Commerce Committee chairman.
Toyota Motor Europe said it will recall 52,903 Prius cars in Europe to modify software used to manage the anti-lock brake system. The Toyota City, Japan-based carmaker said last week it modified braking software on newly built Priuses in late January.
The model, driven by U.S. actor Leonardo DiCaprio and Apple Inc. co-founder Steve Wozniak, is the world’s best-selling hybrid car. Toyota has sold 197,000 units of the latest version in Japan and 103,200 in the U.S., according to the company.
Toyota has been investigating reports that Prius owners driving at low speeds on bumpy or icy roads may experience moments where the car continues to coast for about a second after the brakes are applied, because of the anti-lock brake system. The carmaker has said it received complaints about Prius brakes through dealers starting in the last few months of 2009.
Toyota said today it stopped shipments of the Lexus HS250h and SAI hybrids from a factory in southern Japan to inspect their braking systems.
The vehicles included in today’s recall are Prius hybrids built between April 20, 2009, and Jan. 27, plug-in Prius hybrids built between Nov. 25, 2009, and Feb. 5, SAI hybrids built between Oct. 2, 2009, and Feb. 8, and Lexus HS250h hybrids built between June 10, 2009, and Feb. 8.