Toyota hit with Prius woes as it deals with recalls of other models

Toyota Motor Corp. will recall 270,000 Prius hybrid vehicles over brake problems in the United States and Japan, a leading newspaper said Friday.

The recall would affect the new Prius hybrid model, which went on sale in the United States and Japan in May 2009, Japan's top business newspaper, Nihon Keizai, said.

Toyota spokeswoman Ririko Takeuchi said Friday the Japanese auto giant has launched a probe into the Lexus HS250h model because it uses the same brake system as the Prius hybrid. Ms. Takeuchi said Toyota has not received any complaints about the Lexus HS250h model, and that the probe is to ensure safety.

Ms. Takeuchi said Toyota had not yet decided whether to recall the Prius.

"Nothing has been decided on whether we will recall or not," Ms. Takeuchi said.

More than 170,000 of the new Prius models have been sold in Japan. About 103,000 have been sold in the U.S. since last May.

Toyota acknowledged Thursday design problems with the brakes in its prized Prius, adding to the catalog of safety woes at the Japanese automaker as it reels from global recalls of nearly 4.5 million vehicles for faulty gas pedals.

Toyota said it had corrected problems with the antilock brake system in Prius models sold since late last month, including those shipped overseas.

Meanwhile, the automaker's area dealers suggest too much is being made of the company's problems.

Still, some auto analysts said Thursday that Volks-wagen, which is building a Chattanooga plant, has a chance to seize market share as it tries to dethrone Toyota as the world's top seller.

"It's very likely Toyota demand will drop," said Jeannine Fallon of the auto Web site Edmunds.com.

Part of the burden of being the No. 1 automaker is learning to deal with increased scrutiny, but Toyota is getting some undeserved publicity, said Ed Emerson, a sales manager with Capital Toyota on Lee Highway in Chattanooga.

"Anytime you're the king of the mountain, there's always someone trying to knock you off," Mr. Emerson said. "When you're No. 1, you're the person that everybody's going after."

The National Highway Traffic Safety Administration announced Thursday it had received 124 complaints of braking problems on the third generation 2010 Prius hybrid, the latest in a series of blows to Toyota's reliability record.

Toyota already has recalled 8.1 million vehicles for accelerator pedal and floor mat malfunctions, which will cost Toyota $2 billion total and 20,000 lost U.S. sales for the month of January, officials said in a conference call Thursday.

But compared to U.S. domestic brands, Toyota recalls are rare, said Jonathan Logan of North Georgia Toyota in Dalton, Ga.

"As many recalls as the domestic brands have had as far as safety issues in the past, it's never been this big," he said. "Those recalls have affected safety as much if not more, but the media hasn't made it a sensational story."

Mr. Emerson's defense of Toyota comes as VW, now the No. 3 automaker in the world for sales, has set its sights on surpassing Toyota by 2018.

"It's up for grabs, to be quite honest," said industry analyst Erich Merkle of autoconomy.com.

General Motors is the No. 2 automaker in sales worldwide.

Mr. Merkle said many believed Toyota would occupy the top spot "for infinity." But Toyota has grown quickly in a short period of time and may have approached its limitations related to maintaining quality, he said.

At the same time, Mr. Merkle said, there are limits on how much VW can capitalize on Toyota's woes because of its low exposure in the United States, something VW is trying to fix with the opening of its $1 billion Chattanooga production plant.

Aaron Bragman, an analyst for IHS Global Insight, noted that the Chattanooga factory won't come on line until the first part of 2011 as the German automaker tries to more than triple annual U.S. sales to 1 million vehicles. Toyota could be back into full sales swing in just a couple of months, he said.

"There is opportunity, but (Volkswagen) needs to act on it," Mr. Bragman said.

Eddie Triplett, general manager of Toyota of Cleveland, said the latest announcement regarding the regenerative braking system on the Prius was not easy to take.

"Sometimes when it rains it pours," he said. "These are still man-made pieces of equipment, and there are still errors to be made, and every manufacturer, regardless of some of their 'holier than thou' attitudes at the moment, they all have their share of issues."

Though some manufacturers have offered incentives specifically targeted at Toyota customers, Mr. Triplett commended Volkswagen's approach to Toyota's troubles.

"They just said, 'We want to be aggressive competitors in the world market, and that's not our style,' and I think that's very honorable," he said.

"And besides, you never know who will be the next manufacturer on the hot seat with a major recall to deal with."

The Associated Press contributed to this story.

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