Toyota CEO Apologizes for Recalls, Acknowledges Prius Braking Problems

It's never too late to say you're sorry -- or so Toyota hopes. Speaking at a hastily called news conference late Friday in Japan, the beleaguered auto giant's president apologized for the recent spate of recalls and acknowledged that its new-generation Prius, which went on sale in May, has brake problems. President Akio Toyoda said Toyota Motor (TM) is still deciding whether to recall the popular hybrid vehicle.

Toyoda, grandson of the company's founder, promised to set up a special committee, which he would head himself, to monitor and boost quality, the Associated Press reported. Toyoda has faced criticism for his seeming absence amid the crisis, the worst since the company's founding in 1937.Toyoda said his company needed to do more to assure customers about the safety of its vehicles. "I feel we are in stormy weather," he said. "Under this situation, [we] must regain customer trust. Tackle the problem. My role is to carry it out. We lacked customer perspective. It's very unfortunate."

While the company still weighs whether to recall more than 100,000 2010 Prius cars for the brake problems in the U.S., Toyota is mired in a massive recall of some 8 million cars worldwide for unintended acceleration in two separate recalls. One involves accelerator pedals that can get hung up on floor mats, while the other involves accelerator parts that in some circumstances lead gas pedals to "stick." Toyota has begun shipping parts to dealers to rectify the latter problem.

Threat to Toyota Brand

The problems have put a big dent in Toyota's quality image -- but none threatens more so than the looming recall of the Prius for its braking woes. The gas-electric vehicle, Toyota's third best seller in the U.S., is an icon of the company's engineering prowess and commitment to quality and innovation. The Prius has become the darling of some Hollywood stars, such as Leonardo DiCaprio, and those aligned with ecology movement.

"Trouble with the Prius means real trouble for the Toyota brand," said Ryoichi Shinozaki, a crisis management expert at Kyodo Public Relations Co. "It is a symbol of its commitment to ecology. It lies at the heart of Toyota's new successful business that was defined differently from its past success," he told the AP.

The National Highway Traffic Safety Administration has received 124 complaints about the Prius' anti-lock braking system, blamed for four crashes. Drivers have complained that upon braking on slippery or bumpy roads they felt their cars lag or surge rather than stop. A Toyota official said Thursday that the problem could be fixed by pressing more firmly on the brake pedal. Still, the company acknowledged it modified and implemented a software programming fix for the problem in Prius models sold since last month.

Prior generation Priuses, model years 2004-09, are listed among those recalled for unintended acceleration caused by floor mats.

New Braking System

The braking problem doesn't exist in prior-year Priuses. The 2010 model added an additional braking-system technology called regenerative braking. Not uncommon in other hybrid vehicles, the technology uses energy created in braking, such as in stop-and-go driving, to aid in recharging on-board batteries. The sensation of inadequate stopping power is created when the Prius transitions from one braking system to the other, the company said.

Toyota's extensive list of recalled vehicles has lead to scrutiny of the auto maker by U.S. lawmakers. The House Oversight Committee is planning hearings next week, the first of two in Congress this month. Committee members will examine whether Toyota or the NHTSA dealt with problems with Toyota vehicles quickly and effectively.

Of course there's more at stake than just Toyota's reputation. The recalls are already estimated to cost Toyota more than $2 billion after accounting for the cost of repairs and lost sales. What remains unknown is whether Toyota's less-than-forthcoming corporate culture will be altered by the crisis -- a change that's much needed if the brand expects to regain its once lofty quality image.
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