Toyota president apologises for recall

By Jonathan Soble in Tokyo and Bernard Simon in Toronto

Published: February 4 2010 12:34 | Last updated: February 5 2010 13:07

Toyota Motor president Akio Toyoda bows at the start of a news conference in Nagoya,
central Japan. MrToyoda apologised on Friday for a massive global recall that has tarnished
the reputation of the world’s largest car maker

Toyota’s president Akio Toyoda apologised on Friday to the company’s customers for the
Japanese carmaker’s massive recall of its vehicles, adding that he would set up and lead a
special global quality improvement task force to investigate the problems.

“The fact that we have caused such concern is a cause of regret for us – we are all working in
unison to establish confidence again,” Mr Toyoda told reporters in Nagoya, Japan on Friday.

The carmaker, facing a public relations nightmare over its massive recall programme, said it
would announce measures for its Prius model once the decision had been made.

Except for a brief interview with a Japanese broadcaster while in Switzerland a week ago, Mr
Toyoda had not commented on the crisis, prompting criticism from public relations experts
and consumers about Toyota’s response.

However, the carmaker’s shares became one of the few gainers on the benchmark Nikkei on
Friday in spite of local media reports that it was considering a recall of its third-generation
Prius hybrid cars. Its shares rose 1.1 per cent to Y3,315 as investors were encouraged by its
revised earnings forecast.

Also on Friday Standard & Poor’s, the credit rating agency said it had put the carmaker’s
double A debt rating put under review with “negative” implications, citing concerns about
quality issues.

The credit rating company said in a statement on Friday that the move reflected its increased
concern over the potential negative impact on Toyota’s business risk profile of unfolding
developments related to recent quality-related issues.

Meanwhile, US safety regulators have begun a formal probe into brake problems on the
world’s best-selling hybrid petrol-electric car.

The US National Highway Traffic Safety Administration on Thursday said that it had
received 124 complaints about braking problems on the 2010 model of the Prius, including
four relating to crashes.

It announced the investigation after Toyota’s disclosure that it had identified a design problem
with the Prius that could affect the performance of the brakes on icy or uneven roads. Toyota
said that it would co-operate fully with the investigation.

The world’s biggest carmaker has recalled more than 8m vehicles since November to fix
accelerator pedals and out-of-position floor mats, which have been linked to crashes. On
Thursday, it put the cost of those recalls and a related sales and production freeze at up to
Y180bn ($2bn).

However, the company said it expected to return to profit in the year to March as a result of
government scrappage incentives that have lifted car sales worldwide.

Hiroyuki Yokoyama, Toyota managing director responsible for quality control, said that it
had not been decided whether to issue a broad recall of the Prius and that the brake problem
was not considered a safety threat.

The issue involved software that controlled the car’s anti-lock braking system. When the ABS
was engaged, some drivers might feel a short “pause” when the car’s brakes switched from
“regenerative” mode to standard hydraulic braking.

Toyota engineers had reprogrammed the ABS software last month after dealers and the
Japanese transport ministry received complaints, he said. For cars already on the road, Toyota
would for now perform updates only on request.

Toyota shares have lost nearly a quarter of their value since the company acknowledged the
accelerator pedal fault on January 21 and recalled 2.3m affected vehicles in the US.

Toyota’s projected return to profit appeared at odds with its recent difficulties. The company
expects to earn Y80bn in the 12 months ending March 31, an improvement over its November
forecast of a Y200bn net loss.