Toyota eyes Prius recall; braking woes hit Ford hybrids

Toyota is already recalling some 8 million cars around the world for problems related to unintended acceleration which have been linked to up to 19 crash deaths in the United States over the past decade.

Safety regulators in both the United States and Japan have launched probes into the braking problems with the Prius, a pioneer in gasoline-electric hybrids and Japan's top-selling car last year.

Analysts said the latest problems were a further unwelcome development for Toyota, but would not necessarily cause permanent damage it its image.

If Toyota can fix the faulty brakes properly and quickly, I don't think it will have any long-term impact on the brand, said Zhang Xin, an analyst with Guotai Junan Securities in Beijing. After all it's been so popular in North American for so many years.

In what could be deemed a broader problem with hybrid cars, Ford Motor Co said on Thursday it would roll out a software patch for consumers to address similar problems with braking reported on its Ford Fusion and Mercury Milan models.

A source with knowledge of Toyota's discussions with Japanese safety authorities told Reuters on Friday the company was leaning toward issuing a recall, even if the transport ministry does not technically consider the issue to be a safety hazard.

Since its launch last May, Toyota has sold 311,000 units of the newest version -- around 200,000 in Japan and another 103,200 in the United States.

HALO DENTED

Toyota's problems have cast a pall over its reputation for quality, hit sales and profits and knocked about $30 billion, or about a fifth, off its market value.

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.

I feel a bit anxious, said 61-year-old Yasuo Ishizuka, who drives a Prius taxi in Toyko. As a taxi driver security is very important to me and hearing that such troubles occurred to brakes, I cannot drive feeling safe anymore.

Both Toyota's and Ford's hybrids capture the energy from braking to recharge an on-board battery to boost mileage from its gasoline engine.

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.

The U.S. National Highway Traffic Safety Administration 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.

Both Toyota and Ford said they had come up with software fixes for the problem.

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 in Toyota picked up from a 10-month low on Friday in Tokyo after it reported better-than-expected quarterly results and raised its outlook despite its growing recall-related problems.

It looks like some investors find Toyota shares attractive at current levels as the stock has fallen to about one times its price to book ratio, said Eiji Hakomori, analyst at Daiwa Securities Capital Markets.

The stock ended up 1.1 percent at 3,315 yen defying a sharp drop in other auto stocks hit by the stronger yen.

The issues facing Toyota are not going to be solved that easily, said Nagayuki Yamagishi, a strategist at Mitsubishi UFJ Securities. What we're seeing today is a technical rebound because it was sold so much.

(Additional reporting by Chang-Ran Kim, Yumiko Nishitani and Elaine Lies in Tokyo; Fang Yan in Shanghai; John Crawley in Washington; Writing by Lincoln Feast; Editing by Jean Yoon)