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Toyota's President Apologizes for Recall


By Makiko Kitamura

(Bloomberg) — Toyota Motor Corp.'s President Akio Toyoda apologized for the carmaker's growing recall crisis in his first scheduled public appearance since the company halted U.S. sales and production of its best-selling models last month.

The company will set up a new committee on quality control, Toyoda, 53, grandson of the company's founder, told reporters in Nagoya, Japan, today.

Toyota, the world's largest automaker, announced a recall of 2.3 million U.S. vehicles on Jan. 21 to repair defects linked to unintended acceleration. The company has lost almost $34 billion in market value as the recall has grown to almost 8 million units worldwide, tarnishing Toyota's reputation.

Separately, Japan's government has ordered Toyota to investigate complaints from customers about brake failures in the latest version of its Prius hybrid car, the nation's best- selling vehicle last year.

The company is still considering measures related to the Prius, Toyoda said. The carmaker will hire outside experts for its quality committee, said Executive Vice President Shinichi Sasaki.

U.S. Probe

The U.S. Transportation Department is also investigating reports of brake failures in the Prius. 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.

Toyota, based in Toyota City, Japan, said this week it began using modified braking software on Priuses built since January. The newest Prius model is built exclusively in Japan.

The Prius, driven by U.S. actor Leonardo DiCaprio and Apple Inc. co-founder Steve Wozniak, is the world's best-selling hybrid vehicle. Toyota has sold 1.615 million units of the latest version worldwide, including 572,800 in Japan and 833,200 in North America, according to the company.

Bumpy Roads

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 said yesterday it had received complaints about Prius brakes through dealers starting in the last few months of 2009. Toyota changed the design of the brake software at the end of January, the company said. Toyota is also examining HS250h and Sai hybrid models and considering steps dealers can take for current Prius owners, including exchanging some parts.

The brake complaints aren't related to incidents of sudden acceleration in the U.S., company spokeswoman Ririko Takeuchi said. The recalls related to unintended acceleration may cut demand for the company's vehicles by 100,000 units, Toyota said yesterday.

Profit Forecast

The company yesterday 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 faces at least 29 lawsuits filed on behalf of customers in the U.S. and Canada seeking a range of damages from loss of cars' value to a return of profits. It also faces at least 10 lawsuits brought by individuals claiming deaths or injuries caused by uncontrollable acceleration.

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.

—Editors: Terje Langeland, Bret Okeson

To contact the reporters on this story: Alan Ohnsman in Los Angeles at +1-323-782-4236 or aohnsman@bloomberg.net


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