Toyota Motor’s (TM) Prius hybrid has retained its position as Japan’s top-selling car in March despite the automaker’s global recall woes that involved braking problems with the popular hybrid.
According to Japan Automobile Dealers Association, more than 35,546 units of Prius were sold in March, making it the best-selling model for the 11th straight month. The association has also informed that the gas-electric hybrid led the fiscal year ended March 31, 2010 sales in Japan. Its sales quadrupled on a year-over-year basis to 277,485 units.
Sales of the Prius have been boosted by its reputation for delivering incomparable mileage as well as by tax breaks and other government incentives for environmentally friendly vehicles.
In February, Toyota recalled 437,000 vehicles, including its popular 2010 Prius and other hybrids such as the Lexus HS250h sedan (sold in the U.S. and Japan) and the Sai (sold only in Japan) related to a problem with their braking systems.
The 2010 Prius has an overhauled regenerative brake system, which uses energy from the wheels to recharge the car’s battery. The car also has an antilock brake system. Toyota has found out that the problem with the brake system occurred as the car switched to conventional from regenerative brakes and the antilock brake system was used simultaneously.
In September last year, Toyota made a recall that included the older version of Prius (2004–09 model) due to a problem with the accelerator gas pedals. So far, Toyota has recalled 8.5 million vehicles around the world related to problems such as faulty accelerator gas pedals, slipping floor mats and defective braking systems.
Toyota has been slapped with dozens of lawsuits due to the safety crisis. The value of claims under the lawsuits is estimated to reach about $4 billion, reflecting an average loss of $600 per vehicle.
To make matters worse, the U.S. government has imposed the highest-ever fine of $16.4 million on Toyota, accusing it of a deliberate delay in recalling the vehicles by hiding its defects even though manufacturers are legally obligated to notify the U.S. safety regulators within 5 business days if they come to know of a safety defect.
It is now up to Toyota to decide whether it will accept the fine or fight the government. The automaker has been given 2 weeks for its response.
Read the full analyst report on “TM”
Zacks Investment Research
