Toyota Motor Corp was preparing a global recall of its new Prius model on Monday, further damaging its reputation for quality and reliability on the heels of two other massive recalls.
In addition, Japan's Nikkei newspaper reported that Toyota will halt domestic production of its Sai and Lexus HS250h hybrids, which are to be recalled for faulty brakes, at the end of this week.
In the apparent first of a potential rush of legal claims over the Prius, the owner of a 2010 Prius has sued Toyota in Los Angeles, claiming the automaker failed to fix a brake defect and seeking a court order requiring a recall.
Toyota spokesman Mike Michels said the automaker was moving toward announcing a remedy for the Prius brake glitch.
We expect to be able to share details of solutions early this week, he said.
Since the launch of the new Prius last May, Toyota has sold around 200,000 of the cars in Japan, 103,200 in the United States and 29,000 in Europe.
As Toyota's North American plants resumed production of eight models involved in one an earlier safety recall for sticky accelerator pedals, the world's largest automaker said it was getting ready to recall the Prius hybrid car in Japan as early as Tuesday, a source familiar with those plans said.
The Sai and Lexus production halt is expected to last at least a week, the Nikkei said. U.S. Transportation Department officials had no comment on the latest Prius development out of Japan.
Daniel Warshaw, a lawyer for Pearson, Simon, Warshaw & Penny LLP, said he believes his client is the first to file a suit seeking class-action status over the braking complaints on the Prius.
I believe there will be many other lawsuits across the country in 72 hours, he told Reuters.
A Toyota representative could not immediately be reached for comment.
Meanwhile, complaints to U.S. safety regulators about 2010 Prius brake problems have jumped sharply since the Transportation Department announced a formal investigation last week.
Several complaint files total more than 1,000 reports from vehicle owners but a partial review of the documents submitted to the National Highway Traffic Safety Administration found some duplicates, so the exact number is unclear.
NHTSA reported 124 complaints when it opened the investigation on Feb 3.
The latest data included four injuries, compared with two last week. The two new injuries were not part of duplicate reports.
Toyota shares, which have lost about a fifth of their value since late January, dropped another 2.5 percent to close at $72.85 on the New York Stock Exchange on Monday.
More bad news came when KBB, or Kelley Blue Book, said on Monday it plans to cut used-car values of recalled Toyotas by 1.5 percent on concerns around the growing supply of unsold Toyotas on both dealer lots and at auctions. This came after KBB on February 5 cut used-car values of recalled Toyotas by 1-3 percent.
Used-car values are a key component in car dealers' ability to set residual values -- or how much a used car will be worth 36 months after purchase -- and interest rates.
CONGRESSIONAL SCRUTINY AHEAD
With U.S. Toyota plants resuming production, steps to fix problems with delayed braking in certain road conditions would follow in the United States, Europe and other markets, a source familiar with Toyota's plans said.
Toyota said on Monday it restarted production at six U.S. and Canadian plants with no issues, a week after halting work, as problems with unintended acceleration spiraled into the recall of more than 8 million vehicles worldwide.
The company, which has boosted its green credentials with the low-emission Prius, has said it was discussing with safety authorities worldwide on how to resolve a software glitch on the Prius.
Toyota faces further scrutiny on Wednesday, when its North America chief executive, Yoshi Inaba, testifies to Congress in front of the House Oversight Committee in Washington.
Transportation Secretary Ray LaHood and National Highway Traffic and Safety Administration Administrator David Strickland will also testify.
U.S. safety authorities and members of the Obama administration have accused Toyota of responding too slowly to problems related to uncontrolled acceleration that have been linked to up to 19 crash deaths in the United States over the past decade.
Toyota President Akio Toyoda apologized on Friday for the earlier series of recalls. He said the company was rushing to reach a decision on the Prius and was taking the unusual step of bringing in outside experts to review quality controls.
A Toyota Motor Europe spokesman said on Monday that to date, the company had received no reports of problems with the new Prius in the region, but a decision on the next steps for the model, involving discussion with other regions, would be made very soon.
Warshaw, the lawyer who filed the Prius lawsuit in California, said the negligence and breach-of-warranty suit seeks unspecified monetary damages and injunctive relief requiring Toyota to fix the problem on all 2010 Prius and Lexus HS250h hybrids, which share the same braking system.
The crux of the (suit) is to get these vehicles fixed and safe, he said.
Warshaw said he brought the action in California courts because the state has some of the nation's toughest consumer protection laws and because Toyota's U.S. sales operations are headquartered there.
Moreover, he said that the bulk of some 103,000 model-year 2010 Prius cars on the road in the United States were sold in California. The U.S. Transportation Department website lists about 100 Prius braking complaints, he said.
(Reporting by David Bailey, Bernie Woodall, Chang-Ran Kim, Taiga Uranaka; additional reporting by Steve Gorman in Los Angeles and John Crawley in Washington; Writing by Helen Massy-Beresford, Kevin Krolicki and Matthew Lewis; editing by Bernard Orr)