February 5, 2010 / 2:35 AM / 8 years ago

WRAPUP 7-US begins probe of Prius as Toyota woes mount

* NHTSA probes reported braking problems with Prius

* Toyota says to cooperate, no word on recall for hybrid

* Ford to fix software on hybrids to address brake issue

* Analyst calls Toyota’s response ‘shocking’ (Adds consumer complaint, background on Ford, dealer reaction)

By John Crawley and Bernie Woodall

WASHINGTON/DETROIT, Feb 4 (Reuters) - Toyota Motor Corp (7203.T), already reeling from two massive recalls, faced the possibility of a third when U.S. safety regulators opened a probe on Thursday into a braking problem on the Prius, the world’s top-selling hybrid.

The probe of the Prius, which has powered Toyota’s image of fuel efficiency, compounds a safety crisis that has hit its sales, financial results and reputation for quality and prompted the recall of more than 8 million vehicles around the world for problems with uncontrolled acceleration.

Separately, Ford Motor Co (F.N) said it would roll out a software patch for consumers to address a reported problem with braking on its hybrid Ford Fusion and Mercury Milan models. [ID:nN0497845]

Analysts and rivals say the Prius has emerged as a kind of environmental “halo car” for Toyota, an icon of green design with an intense following among loyalists, which has lifted the public image of the whole company.

The Nikkei newspaper reported that Toyota would recall an estimated 270,000 units of its new Prius in the United States and Japan to fix the brake problem.

Toyota spokesman Mike Michels said he could not comment on that report. He said the automaker had no plans to suspend sales of the Prius as it did with eight other models recalled for a faulty accelerator pedal.

Like the more popular Prius, the Ford hybrids capture the energy from braking to recharge an on-board battery to boost mileage from its gasoline engine.

Ford said its software fix would address the way the traditional brakes and the regenerative braking systems interact. The same broad set of issues affects the Prius.

Ford’s action 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 were ended almost 5 percent lower on Thursday.

Shares of Toyota (TM.N) dropped another 2.3 percent in New York on Thursday. The stock has lost 20 percent since it announced a sweeping recall for accelerator problems in late January. The recall has also wiped $30 billion from Toyota’s share value.

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To read a Breaking Views column on Toyota, click on

[ID:nN04171554]

To view a Reuters Insider Breaking Views, see:

Breakingviews: Fine Mess for Toyota

link.reuters.com/jym57h

See also: Toyota Options Bullishness Proves Fleeting

link.reuters.com/pyj77h

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The U.S. National Highway Traffic Safety Administration said it had no comment on the report that Toyota was planning to recall the Prius for braking problems with that vehicle and said any such safety action would be announced by Toyota.

NHTSA said it has received 124 complaints about momentary braking problems after motorists rolled over bumps or potholes with the third-generation Prius.

Four crashes were alleged by motorists to have been caused by the problems, NHTSA said. The investigation covers the 2010 model year Prius.

“We have heard about NHTSA’s intention to begin investigation. Toyota will fully cooperate,” Toyota spokeswoman Cindy Knight said.

TOYOTA: ‘WE HAVE FALLEN SHORT’

Toyota changed the software controlling braking in the Prius on models manufactured in Japan from last month, a step it had not announced before Thursday.

“When driving over some extremely rough spots, the car accelerates by itself,” one driver wrote in a complaint to NHTSA filed in early December. “It feels like the brake pedal becomes an accelerator. It only lasts about two or three seconds but it’s very obvious.”

The 2010 model Prius is a completely redesigned version of the iconic hybrid that Toyota has said is the most important vehicle in its line-up and almost a brand on its own.

Toyota sold almost 140,000 Prius hybrids in the United States in 2009. That represented almost half of all hybrid sales in the market.

Toyota Managing Officer Hiroyuki Yokoyama, who oversees quality, said Toyota had reworked a software program that controls the interaction between the “regenerative” braking and the traditional braking systems.

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

“This issue shows that we may have fallen short of the standards expected of us by our customers,” Yokoyama said.

Late on Wednesday, Transportation Secretary Ray LaHood spoke with Toyota President Akio Toyoda, who reassured him that Toyota takes “U.S. safety concerns seriously,” a Transportation Department statement said.

Officials said LaHood had not requested a recall of the Prius during his conversation with Toyoda.

Toyota expects costs and lost sales from its massive safety recall to total $2 billion by the end of March. The automaker’s U.S. sales tumbled 16 percent in January and are expected to fall further in February.

Toyota told its 1,200 U.S. dealers that it would begin sending out recall notices to U.S. consumers covered by a recall of some 2.3 million vehicles in late February.

But some dealers across the United States began repairs of defective gas pedals on Thursday, hoping that extended hours, free oil changes and complimentary rental cars can help restore the automaker’s tarnished reputation with customers. [ID:nN04107376]

“Until that car does me wrong, I stand behind it,” said Kathy Geneso, a homemaker in Saginaw, Michigan, who has a 2007 Camry that is subject to the recall.

“But with all the media reports I keep seeing, I am very well aware of what I am doing every time I get behind the wheel,” she said.

See also TAKE A LOOK-Toyota’s woes mount [ID:nN27231388] (Additional reporting by Ran Kim in Tokyo, Soyoung Kim and David Bailey in Detroit, writing by Kevin Krolicki, editing by Matthew Lewis, Gary Hill)

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