Toyota Fights to Keep Grip on Investor, Driver Confidence

Tokyo. Moody’s said on Tuesday it had put Toyota’s credit rating on review for a possible downgrade, warning that the motor-vehicle giant’s worldwide recalls “may significantly damage” its brand image.

“This action is prompted by Moody’s concern that the growing scale of Toyota’s product problems and associated recalls may have longer term impacts on its brand equity, pricing power and market share in key markets,” the financial research and credit rating company said.

Japan’s transport minister on Tuesday criticized Toyota for its handling of safety problems, saying the motor-vehicle giant should have been quicker to recall faulty vehicles. “I would like you to respect the viewpoint of drivers and I wish you had taken measures earlier rather than simply saying it was not a major technical problem,” Transport Minister Seiji Maehara told Toyota president Akio Toyoda.

Toyota said on Tuesday it would recall hundreds of thousands of hybrid vehicles around the world, including its best-selling Prius, plunging deeper into crisis as lawsuits in the United States piled up.

Facing a barrage of complaints ranging from unintended acceleration to brake failure, Toyota is scrambling to reassure drivers that it did not sacrifice its legendary safety standards in its successful push to be the world’s largest motor-vehicle manufacturer.

But in another heavy blow to its brand image, long synonymous with reliability and quality, Toyota said it was recalling 437,000 Prius and other hybrid vehicles to repair a flaw in the braking system.

The company is now pulling almost 8.7 million vehicles around the world — more than its 2009 global sales of 7.8 million. “We will tackle the issue with dealers and suppliers,” Toyoda said. “Together we will do everything in our power to regain the confidence of our customers.”

The Toyota family scion, under fire for his handling of the crisis, said he would travel to the United States to explain the safety troubles.

He denied the company, whose US executives face a congressional grilling today, had become overly complacent as it overtook General Motors to take the global pole position.

“I don’t think Toyota is an almighty company. We are confident that we’ve been making improvements when we spotted a failure or defect to provide better products. We will continue this attitude in the future,” he said.

Toyota is facing a raft of lawsuits in the United States. In one of the latest, a California woman is alleging her Prius has severe braking problems which make it dangerous to drive.

The company is pulling roughly 223,000 hybrid vehicles in Japan and about 147,500 in the United States due to a problem with the anti-lock braking system, in a recall that also extends to Europe and other markets.

Drivers “can experience reduced braking performance resulting in increased braking distance”, the motor-vehicle manufacturer said in a statement.

The Prius is the world’s most popular hybrid and its troubles are a major setback to Toyota’s efforts to stay ahead in fuel-efficient motor-vehicles.

The Japanese manufacturer has said it redesigned the anti-lock braking system for Prius cars produced since last month.

It said a delay occurred when the vehicle switched to the conventional hydraulic brake from regenerative braking, used by hybrids to capture the energy of the car’s motion to recharge the battery for its electric motor.

The brake trouble comes on top of recalls of more than 8 million vehicles worldwide due to sticking gas pedals that have been blamed for a number of fiery crashes, some deadly.

The group denied it was slow to act on the safety problems.

The company received a US report of a sticky gas pedal on a pick-up truck in 2007, but said it was unable to pinpoint the cause.



Agence France-Presse

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