Will Toyota recalls sour Californians on the Prius?

Sacramento BeeFebruary 10, 2010 

SACRAMENTO — The Prius, shining star of Toyota's green car lineup and a decade-long sales success story in California, has joined the beleaguered automaker's recall lineup.

While the Prius recall is relatively small, it could have significant implications for Toyota in California, arguably the most important market for the hybrid. Prices for used Toyotas, including the Prius, have dipped in the past two weeks, according to the Irvine, Calif.-based Kelley Blue Book.

Toyota announced Tuesday that it is recalling 437,000 Prius and other hybrid vehicles worldwide to fix brake problems. In the United States, the recall is targeting 133,000 2010 gas-electric Prius models and 14,500 Lexus HS250h luxury hybrid sedans.

Toyota said the recall is to "update software" in the cars' anti-lock brake systems. The automaker said some owners "have reported experiencing inconsistent brake feel" in cold weather or on roads that are rough or slick.

Since the Prius was launched in the United States in August 2000 as a 2001 model, about one in four Prius cars sold in the United States has been sold in California.

California is the nation's largest green car market, and the Prius has attained something like cult status in Hollywood, with Cameron Diaz, Leonardo DiCaprio, David Duchovny and Rob Reiner among those driving a Prius on Golden State roadways.

Since 2007, R.L. Polk & Co. has rated Sacramento among the nation's top 10 markets for gas-electric hybrid vehicle purchases.

Besides Prius' green characteristics – an electric motor does the heavy lifting on vehicle start-ups – its stock went up during the 2008 period of $4-a-gallon-plus gas in California. The 2010 Prius gets an estimated 51 miles per gallon in city driving and 48 mpg on the highway.

"California is the main market for the Prius, by far. Clearly, it's the largest market in the world for them," said Jesse Toprak, an analyst for Santa Monica-based TrueCar.com.

Toprak said the series of Toyota recalls is not necessarily surprising. Historically, other automakers have weathered storms of recalls and mechanical problems.

"When something like this happens, consumers become very sensitive about any issues they're having, … and you have more reports of problems," Toprak said. "But (Toyota) simply cannot afford to have this happen again. They built the brand on quality, and this hits them right in the heart."

The latest action puts the number of Toyota vehicles being recalled worldwide at 8.5 million, including those being fixed after reports of sticking gas pedals and gas pedals getting stuck under floor mats. Federal investigations of Toyota vehicles also have been launched on several fronts.

Akio Toyoda, Toyota's president and grandson of the company's founder, on Tuesday characterized the wave of problems as "the most serious" in company history. "We fully understand that we need to more aggressively investigate complaints we hear directly from consumers and move more quickly to address any safety issues we identify," he said in a statement that was published in the Washington Post.

The ripple effects of Toyota's struggles are numerous.

Kelley Blue Book said Tuesday that used-car values of Toyota cars have declined by almost 5 percent over the past couple of weeks.

"While today's newest recall covers the 2010 Prius, it casts a shadow over older Prius models as well," said Juan Flores, KBB's director of vehicle valuation. "Older Priuses not affected by the recall have seen a drop in their used-car value by 1.5 percent."

Still, the recall appears to have had little impact on local Prius owners who talked with The Bee.

Sacramentan Esther Jackson, who drives a 2010 Prius, said she would be "happy to let them fix whatever they want to fix. I still like the car, and it's saving me a fortune on gas bills."

Read the full story at sacbee.com

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