Toyota Recalls Prius Over Brake Problems

Automaker Toyota says it's recalling about 437,000 Priuses and other hybrid vehicles worldwide to fix brake problems. Toyota has now recalled more than 8.5 million cars worldwide because of various manufacturing defects.

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MELISSA BLOCK, host:

From NPR News, this is ALL THINGS CONSIDERED. I'm Melissa Block.

MICHELE NORRIS, host:

And I'm Michele Norris.

If you drive a Toyota Prius, some of you may already be planning that trip to the mechanic to get your brakes checked. A recall has been looming for the popular hybrid, and today, Toyota made it official. So, on top of the company's other recent problems, it's now recalling more than 400,000 vehicles worldwide because of a defect in the brakes.

BLOCK: Roughly a third of those were sold in the U.S: the 2010 Prius model plus a smaller number of Lexus hybrids, the model HS 250h. In a moment, we'll get an expert to explain the special braking system for these hybrids.

But first, NPR's Louisa Lim reports on the latest Toyota recall from Tokyo.

LOUISA LIM: As the cameras click, this could have been another moment of humiliation for Toyota's embattled President Akio Toyoda. Announcing the recall of Toyota's pride and joy, its flagship high-tech hybrid for brake problems was never going to be easy, especially coming after the recall of around eight million other cars for gas pedal and floor mat problems. But his message was clear and unequivocal.

Mr. AKIO TOYODA (President, Toyota Motor Corporation): We will do everything in our power to regain the confidence of our customers.

LIM: Four hundred and thirty thousand cars will be recalled from four different hybrid models. They'll need a software fix from dealers, which can be done in 40 minutes and will begin tomorrow in Japan. The official in charge of quality, Shinichi Sasaki, claimed that these cars do meet safety standards currently. But the recall would go ahead anyway due to customer complaints. There was another apology and another admission from the CEO.

Mr. TOYODA: (Through Translator) Toyota is not omnipotent or free from failure. When we make mistakes or get complaints, we always correct them and end up with better products.

(Soundbite of advertisement)

Unidentified Man: In recent days, our company hasn't been living up to the standards that you've come to expect from us or that we expect from ourselves.

LIM: With this new approach in a new U.S. ad, Toyota seems to have a new crisis management strategy. Writing in The Washington Post today, Toyoda said as president he was taking personal responsibility. This apparently marks and end to the last strategy described by one analyst here of minimize, mitigate, and shift responsibility. But Toyota's reputation revolved around safety and quality, and fixing the damage to the brand isn't going to be easy. Temple University's director of Asian Studies, Jeff Kingston, however is confident.

Professor JEFF KINGSTON (Asian Studies Director, Temple University): They're going to have to dip in to that treasure bank of profits they've salted away over the years. But they're going to do it and I think they're going to come out aggressive to try to turn this around and to turn public opinion around.

LIM: Toyota hasn't yet put a price on this recall, although it estimates the other recalls will cost about $2 billion. But the rating agency Moody's has owned that Toyota's credit rating could be downgraded. And Toyota's shares have lost one fifth of their market value since the crisis began. They were however up three percent today, helped by the perception that Toyota is finally tackling the crisis head on. But independent brokerage CLSA's auto analyst Chris Richter says he fears that Toyota's troubles aren't over yet.

Mr. CHRIS RICHTER (Auto Analyst, CLSA): If it comes out that there was inappropriate action by Toyota officials, that they knew about something and they didn't take the appropriate steps to deal with it, and that could take the share price lower as well.

LIM: Economics aside, the geopolitical ripples are still swelling. A congressional hearing is scheduled tomorrow, that's also when Japan's transport minister, Seiji Maehara, is due to meet the U.S. ambassador to Tokyo, John Roos. Maehara said each country needs to consider how to prevent the recalls from becoming a diplomatic problem.

Louisa Lim, NPR News, Tokyo.

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Can Toyota Recover Its Reputation For Quality?

Toyota President and CEO Akio Toyoda i i

Toyota President and CEO Akio Toyoda, at a Feb. 5 news conference in central Japan, said he was "deeply sorry" for the worldwide recall. Yoshikazu Tsuno/AFP/Getty Images hide caption

itoggle caption Yoshikazu Tsuno/AFP/Getty Images
Toyota President and CEO Akio Toyoda

Toyota President and CEO Akio Toyoda, at a Feb. 5 news conference in central Japan, said he was "deeply sorry" for the worldwide recall.

Yoshikazu Tsuno/AFP/Getty Images

As Toyota's global recall grows to more than 8 million cars, the world's largest automaker has seen its once-vaunted image take a serious beating.

Business experts say Toyota squandered its reputation for quality and reliability by not acting aggressively and decisively to address mounting problems such as sticky accelerator pedals and a brake-system glitch.

"I would give Toyota an 'F' in my class for their corporate responsibility program," says Dartmouth professor Paul Argenti, who teaches at the Tuck School of Business.

Argenti says Toyota did three things wrong: It didn't help people understand what it was doing to fix the problem; it didn't apologize in an appropriate way; and it wasn't humble enough in addressing consumer concerns.

The Japanese giant didn't own up to the problems — it minimized them, pointed to a supplier, and even blamed the drivers. Toyota watchers wanted to know what was going on, and they wondered where the company's leader was.

Heard On 'Morning Edition':

President and CEO Akio Toyoda was nowhere to be found, until a Japanese TV crew caught up him at the glitzy World Economic Forum in Davos, Switzerland. Toyoda made brief, unsatisfying remarks and then left — in an Audi.

"It's astounding. It's too over the top for a Hollywood version of this. It's getting hard to satirize Toyota, because their judgment is so poor right now," says Jeffrey Sonnenfeld of the Yale School of Management.

Last week, Toyota finally offered a more traditional apology, but it was at a hastily called news conference and wasn't convincing to many people.

Sonnenfeld says what the company needs to do now is get accurate, factual information to the public, enlist outside engineers to help find and fix any safety problems, and put its CEO out front.

"Then get out there in the blogosphere with whatever the right information is and some evidence — give us the demonstrated evidence that this fix is working," he says.

Toyota also needs much better crisis management, says Harlan Loeb, a senior executive with the public relations firm Edelman. Over the next two to three months, he says, the automaker has to demonstrate that it has resolved all the issues for each and every Toyota owner.

"They need to prove that their eye on the consumer is unwavering and laser-like: 24/7 service to evaluate and repair the cars, some type of action pledge where there is a 100,000-mile warranty on these cars," Loeb says.

Even then, it could take years to earn back public trust. Toyota is trying to regain some of that consumer confidence with new corporate image ads, but Kelley Blue Book has already lowered the value of recalled Toyotas by hundreds of dollars — and Toyota's competitors are already pouncing.

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