Toyota Motor Corp said it will recall some 3.8 million vehicles in the United States because of the risk that a loose floormat could force down the accelerator, a problem suspected of causing crashes that have killed five people.
The recall includes the hot-selling Prius hybrid and would be the largest ever for Toyota, which has built a reputation for safety and quality that helped it surpass General Motors as the world's top automaker last year.
The recall also comes at a critical time for Toyota as it scrambles to squeeze spending to bounce back from record losses forecast this year amid a broad-based slump in car sales.
This is an urgent matter, said U.S. Transportation Secretary Ray LaHood.
The U.S. government said it has received reports of 100 related incidents that include 17 crashes and five fatalities involving Toyota vehicles.
Toyota said it was too early to provide a cost estimate for the move. Deutsche Securities auto analyst Kurt Sanger estimated the cost at a modest 5-10 billion yen ($50-$100 million), saying the bigger worry was its image.
Monetarily I wouldn't expect it to be a major issue for Toyota, he said, noting that labor costs, which typically make up the bulk of recalls, would likely be minimal.
The bigger concern is reputational.
In Tokyo on Wednesday, Toyota shares were down 1.1 percent, underperforming a 0.2 percent fall in the main Nikkei average and a rise in rival Japanese car stocks.
CAR REACHED 120 MPH
Toyota spokesman Yuta Kaga in Tokyo said on Wednesday that the floormats subject to the recall are used only in vehicles sold in the United States.
The company is also checking whether the problem originates in the floormats or the process of placing them in the vehicles, he said, without naming the floormat supplier.
Toyota and U.S. safety regulators warned owners to remove all driver-side floormats from eight Toyota and Lexus models manufactured in the last six years as an immediate safety precaution.
Last month, an off-duty California state trooper and three members of his family were killed in the San Diego area in a crash of a 2009 Lexus ES350.
Before the crash, a passenger in the car had called 911 and told dispatchers that the accelerator was stuck and the car had reached 120 miles per hour (193 km per hour).
The recall will cover the Camry and Avalon sedans, the Prius hybrid, the Tacoma and Tundra pickup trucks and luxury Lexus models, the IS250, the IS350 and the ES350.
Toyota's largest previous recall was in 2005 for a problem with steering rods, covering about 900,000 vehicles.
The pending recall will be equivalent to about double Toyota's annual sales in the U.S. market.
This is a negative issue and is going to cost (Toyota) very much. (It's) not good for advertising, said Yuuki Sakurai, CEO of Fukoku Capital Management in Japan.
But I'm not worried much about this problem and whether it will remain a negative factor for Toyota in the long term. They can overcome it, he said.
Toyota's sweeping recall stems from a safety issue that has been under review for the past several years.
The National Highway Traffic Safety Administration closed an investigation into floormats in Toyota vehicles that began in 2007 and resulted in a recall of more than 50,000 cars.
That investigation, which focused on the Lexus ES350, concluded that grooves in the floormat could trap the accelerator if the mat was not secured with retaining hooks.
Federal investigators also found many owners were not aware that it takes three seconds to turn off the electronic ignition button that comes standard on that model and the Prius.
Many owners also complained that it was not obvious how to put a runaway vehicle in neutral because of the design of the Toyota gear panel.
One Toyota owner petitioned NHTSA in April of this year to begin a wider investigation, saying that anecdotal reports of unintended acceleration suggested the problem could not be explained only by the floormat problem.
NHTSA has not ruled on that request. One auto safety advocate said he also suspected that reported problems could have causes other than slipping floormats.
Their response is that this is all floormats, Sean Kane, president of Safety Research & Strategies, a consulting and advocacy firm based in Rehoboth, Massachusetts, said of Toyota.
That's not terribly surprising. They would like it to be floormats because that is an easily identifiable mechanical issue.
The San Diego Sheriff's Department has not completed its investigation into the off-duty trooper's crash. Federal safety investigators are also looking into the accident.
Toyota said it was waiting for a final report on the accident but wanted to act because of indications that a floormat may have been involved.
Obviously the tragic accident in San Diego was certainly an eye opener for all of us and we've paid very, very diligent attention to moving forward to try to make sure none of us will be reliving that kind of a very tragic situation, Toyota spokesman Irv Miller said.
Toyota said it would issue specific recall notices as soon as it had a plan to address each of the models affected.
More details on the safety advisory, including the vehicles covered, are available at the Toyota website http://www.toyota.com. Drivers can also call Toyota at 1-800-331-4331 or Lexus at 1-800-255-3987.
(Additional reporting by Kevin Krolicki and Bernie Woodall in DETROIT, John Crawley in WASHINGTON, Yoshifumi Takemoto, Yumiko Nishitani, Kei Okamura, Colin Parrott and Chang-Ran Kim in TOKYO; Editing by Tim Dobbyn and Chris Gallagher)