Toyota ready for 2010 Prius recall: reports

By Kelly Olsen

TOKYO - Toyota is close to recalling as many as 300,000 of its popular Prius hybrids over brake problems, according to Japanese media - a decision that would further embarrass a trusted brand suddenly beset by safety problems.

The company may have no choice: A week has passed since the problems emerged, and analysts say further delays could be devastating to the automaker's already damaged reputation in a global market it fought for decades to dominate.

"Listening to management now, I think they still think there isn't a real problem with the Prius," said Christopher Richter, auto analyst at CLSA Asia Pacific Markets.

"But at this point you don't resist," he added. "Because right now any Toyota vehicle that is perceived to have a problem - you just say, 'We fix it.' That's how you win back the trust."

In the meantime, auto safety experts say driving the Prius is probably still safe but suggest extra precautions, like allowing extra room to stop. A recall would cover Prius cars for this model year.

Kyodo news agency and the country's top Nikkei business newspaper reported Monday that Toyota was likely to notify both the US and Japanese governments of Prius recalls Tuesday.

Toyota spokeswoman Ririko Takeuchi said no decision on a Prius recall has been made.

There are 260 2010 Priuses on New Zealand roads.

The report also said that Toyota was likely to announce recalls of its much smaller selling Lexus HS250h and SAI hybrids, which use a braking system similar to the Prius.

At least 100 drivers of Prius cars in the US have complained to Washington that their antilock brakes seemed to fail momentarily on bumpy roads.

Toyota and the Japanese government have also received dozens of complaints in total about brake problems. The US says the problem is suspected in four crashes that caused two minor injuries.

Toyota says a software glitch is behind the problem and says it has already fixed vehicles that went on sale since last month. It has also said that the brakes will work if the driver keeps pushing the pedal.

Any recall would come on top of the millions of vehicles Toyota has recalled since last fall because the accelerator can become stuck, either because the gas pedals themselves are faulty or because floor mats can catch them.

Still, analysts say, it may be the only way for the automaker to win back its loyal base of drivers.

"The best thing for Toyota to win back consumer trust is to recall vehicles as quickly as possible," said Mamoru Kato, an auto industry analyst at Tokai-Tokyo Securities.

Toyota had an opportunity to clear the air and appear in control at a press conference last week by Akio Toyoda, the company president and grandson of its founder. His appearance, in which he apologized to Toyota customers, was widely panned by Japanese media for coming too late and for not offering a clear picture of what he would do to resolve the company's burgeoning problems.

"I will do my best," Toyoda said.

There are options besides a recall. Toyota has said one choice is a service campaign in which owners would be notified to bring their cars in for repairs. Toyota is in talks with the National Highway Traffic Safety Administration on how to handle the fix. Regulators could demand a full-fledged recall, though they rarely do.

Auto safety experts suggest drivers of the 2010 Prius simply be more careful while braking on rough roads or potholes. Leaving the car in the garage altogether is unnecessary, they said.

"You can drive it, just allot it a little more stopping distance," said Dan Edmunds, director of vehicle testing for the auto research website Edmunds.com. "If you're on a rough road, just be a little more mindful of that."

Jake Fisher, senior automotive engineer for Consumer Reports, agreed that 2010 Prius drivers should simply give themselves a bit more space when braking on harsh surfaces, especially if there are other cars on the road.

"We don't believe it means you should park your car," Fisher said. "If you happen to be driving in the city, for instance, with a lot of pot holes and close traffic, it could be a bigger issue. If I had one of the affected cars, I would probably try to avoid that situation."

Car appraiser Kelley Blue Book, meanwhile, dropped the resale values of recalled Toyotas for the second time in four days Monday, leaving them as much as 4 per cent or $300 to $750 lower than a week ago, depending on the model, another sign that recalls and Toyota's slow response to safety questions have put a dent in the market value of its products.

Toshirou Yoshinaga, auto analyst at Aizawa Securities in Tokyo, said Toyota runs the risk of seeing trust wither further if it does not go for a Prius recall. Just as important, he said, is the need for Toyota to improve how it communicates.

"They have to explain things better," he said. "Their explanation is insufficient."

-AP

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