Toyota president apologizes for global recall

Toyota president apologizes for global recall

Automotive News | February 5, 2010 – 7:31 am EST


NAGOYA/DETROIT (Reuters) — Toyota President Akio Toyoda apologized for safety problems that have left the Japanese carmaker "in crisis" as the group considered a second recall — this time over the brakes on some Prius hybrids.

"Believe me, Toyota cars are safe", said Toyoda — the grandson of Toyota’s founder — breaking his near-total silence on the recall woes.

His news conference came after U.S. rival Ford Motor Co. readied a software update for the braking system on two of its own hybrid models.

Toyoda spoke at the company’s base in Nagoya, central Japan. He admitted that the company was "in crisis" and faced big challenges. "I would like to take this opportunity to apologize from the bottom of my heart for causing many of our customers concern after the recalls across several models in several regions," he said.

Toyota has recalled some 8 million Toyota cars worldwide over problems related to a sticking accelerator pedal and linked to up to 19 crash deaths in the United States over the past decade. Toyoda pledged to set up and personally oversee a quality improvement task force that would involve external experts monitoring quality management.

The crisis has pummeled the reputation of the world number one car maker for quality and reliability.

Toyoda’s absence from view since the crisis began has prompted widespread criticism about the company’s response to the crisis.

The 53 year-old took over as president last year with a promise to steer the company out of its worst downturn in history and bring greater transparency to its sprawling corporate culture.

Kazutaka Oshima, president of Rakuten Investment Management, said investors needed answers.

"Toyoda is responsible for explaining to shareholders since they have lost a significant part of their assets."

Toyota shares have lost about $30 billion or a fifth of their value since January 21 when it launched a U.S. recall related to faulty accelerator pedals.

Toyota said its U.S. dealers had started fixing the pedals and notifying affected owners on Friday.

Now Prius

Safety regulators in both the United States and Japan are now investigating braking problems with the company’s latest version of the Prius, Japan’s top-selling car last year and an icon of green design that has lifted the public image of the whole company.

A source with knowledge of Toyota’s discussions with Japanese safety authorities told Reuters on Friday the company was leaning toward issuing a recall for the new model versions.

Toyoda told the news conference that Prius measures would be announced as soon as they had been decided.

Japan’s transport minister said he had heard from ministry officials that Toyota would recall or voluntarily fix the automobiles affected, including those shipped overseas.

"Toyota’s response came up short from the perspective of its customers," Transport Minister Seiji Maehara said.

Since its launch last May, Toyota has sold 311,000 units of the newest version of the Prius — around 200,000 in Japan and another 103,200 in the United States.

Braking down

Both Toyota’s and Ford’s hybrids capture the energy from braking to recharge an on-board battery to boost mileage from its gasoline engine.

On bumpy roads and on ice, the regenerative brakes of the Prius appear to slip, allowing the vehicle to lurch forward before the traditional brakes engage, Prius owners have said.

The U.S. National Highway Traffic Safety Administration said it has received 124 complaints from drivers of the third-generation Prius. Four crashes were alleged by motorists to have been caused by the problems, NHTSA said.

Both Toyota and Ford said they had come up with software fixes for the problems. Toyota said it had started fixing the problems last month, a step it only revealed on Thursday.

Ford’s decision to roll out a software patch for consumers to address similar problems with braking on the Ford Fusion and Mercury Milan models came after Consumer Reports said one of its test engineers had experienced what appeared to be a loss of braking power with a Fusion hybrid.

Ford said it was aware of one minor accident related to the braking problem but no injuries.

The No.2 U.S. automaker by sales notified its dealers of the problem in October but not the public because it did not believe the glitch represents a failure of the brakes.

Ford shares ended almost 5 percent lower on Thursday.

Shares in Toyota picked up from a 10-month low on Friday in Tokyo after it reported better-than-expected quarterly results and raised its outlook despite its growing recall-related problems.

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