Prius brake problems another blow for Toyota

SAN FRANCISCO — Toyota Motor Corp.’s
woes deepened Thursday after federal regulators said they’ve opened up
a fresh investigation into the automaker’s popular Prius relating to
problems with the brakes.

Since the recalls began to spiral out of control, the company has lost about $30 billion worth of market value.

The National Highway Traffic Safety Administration is formally looking into 124 complaints from drivers claiming Toyota’s flagship hybrid suffers “momentary reduction in braking performance” when traveling on rough roads.

There have been four crashes relating to the problem, two of which have resulted in minor injuries, according to NHTSA.

Toyota had said it was
aware of concerns about the safety of the vehicle and that it has
modified the braking system to address the issue.

Toyota issued a brief
statement later in the day saying it is aware of NHTSA’s “preliminary
evaluation” and that it will “cooperate fully” with the investigation.

Erich Merkle, an analyst at Autoconomy.com, said Toyota’s
mounting problems won’t be going away anytime soon, adding that the
company will have an increasingly difficult time convincing the U.S.
government and consumers that their products are safe.

“The primary reason for buying a Toyota
comes down to safety, reliability and quality, and all that is being
called into question,” he said. “How long will we be chasing these
gremlins?”

A day earlier, U.S. Transportation Secretary Ray LaHood sent investors, and likely Toyota
drivers, running for cover after he warned owners to stop driving their
vehicles. He backpedaled shortly thereafter, but the damage was done.

In a rare bit of news for the world’s biggest carmaker these days, Toyota
posted a quarterly profit earlier Thursday that handily beat analysts’
estimates and said it’ll post a profit for its full fiscal year.

Toyota said in a conference call that the cost of the pedal recalls has come to more than $1.1 billion and will impact fourth-quarter results by another $800 million or so. The company did not forecast any impact on the Prius situation.

—

(c) 2010, MarketWatch.com Inc.

Visit MarketWatch on the Web at http://www.marketwatch.com

Distributed by McClatchy-Tribune Information Services.