RENEE MONTAGNE, host:
Even as Toyota recalls millions of vehicles worldwide, there was this small consolation: At least the Prius was not affected. Today, Toyota lost that bit of comfort. The company admitted there are design problems with the anti-lock braking system in the Prius. Toyota has not recalled the hybrid electric car, and this is a separate problem from the sticking gas pedals that prompted the recall of several other models. Still, problems with the Prius are another blow for a company that has built a reputation for safety and state of the art engineering.
NPR's Frank Langfitt is following the story and joins us. Good morning.
FRANK LANGFITT: Good morning, Renee.
MONTAGNE: Let's start with what the problem is with the Prius.
LANGFITT: Well, we should point out that it's isolated to the 2010 model, and we're not getting a lot of details. But what they're saying is that the brakes are failing, at least in some cases for less than a second.
Now, they've gotten about 180 complaints in both the U.S. and Japan about this, and what seems to be happening is the brakes just aren't working immediately on slick and uneven roads.
MONTAGNE: And does Toyota have a remedy?
LANGFITT: Well, yes, they do. They say they've actually fixed this. And every car that they've sold since January, late January, has the fix, so they're not repeating the mistake. The question is, what do you do about the cars that are on the road, and Toyota hasn't quite decided. For the moment, they're telling drivers to just press the pedal harder. Though the National Highway Traffic Safety Administration in the U.S. and the transport minister in Japan are investigating the brake problem
MONTAGNE: And let me say, again, the Prius has not been recalled. This is a different problem from the sticking gas pedals that prompted the recall of other Toyota models. So what's the financial effect potentially on the company here in the U.S.?
LANGFITT: Well, at the moment, nothing like the earlier recall. If you remember, it was last week they shut down eight models. They stopped selling them. That's more than half their fleet in the United States.
The Prius is the best-selling hybrid in the world, but it's still a small percentage, particularly of the U.S. market. It's very popular in Japan, but hybrids overall in the U.S. may be three percent of the market. Sales rise and fall, depending really on the gas prices.
MONTAGNE: What about the symbolic impact on Toyota?
LANGFITT: Oh. Much, much bigger. You know, this what they call in the car business a halo vehicle. This allowed Toyota kind of to be seen as a green tech leader when Detroit was still churning out those big SUVs. Some debate whether they actually made money on this, but it did wonders for the brand.
The other problem is the P.R. perspective. This story just keeps going. Every day it's a new shoe to drop. First it was the floor mats, then the gas pedals, now we have the brakes on the Prius. So I think Toyota's really desperate just to kind of get out of this news cycle.
MONTAGNE: And Toyota just released an earnings forecast. Is it possible to assess the impact that these current problems will have on the company's bottom line from the earnings forecast?
LANGFITT: Well, not yet, because that was October to December, and they were in fact profitable, and that profit was about $1.7 billion. But they did take a big hit in January sales here in the United States when they stopped selling these things. They are going to get sales going again. But GM and Ford, they sort of see the blood in the water here. They've been offering cash back for Toyota trade-ins.
So the company really needs to get this under control to avoid a longer-term financial impact on the brand and their image.
MONTAGNE: NPR's Frank Langfitt Frank, thanks very much.
LANGFITT: You're very welcome, Renee.
MONTAGNE: Recapping the news, Toyota acknowledged today that there are problems with the anti-lock braking system in the Prius.
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