Toyota began fixing the 2010 Prius even though it said it only was investigating a possible "issue" with the vehicle's brakes.

Toyota owners may still be saying, “Oh, what a feeling,” but likely not for the same reason they did in the past, as the automaker’s growing problems with safety and corporate credibility emerge, Toyota officials in Japan now confirming that they have known about a defect with the brakes on their high-technology halo car, the Prius.

That problem, which can cause the brakes on the third-generation, 2010 Prius to apparently release for up to about a second, was first reported by TheDetroitBureau.com in late December. (Click here)  While Toyota acknowledged receiving reports of complaints to editor Ken Zino, the maker secretly was developing a fix for the problem, one that it quietly put into place on versions of the popular hybrid that it has been building since sometime in January.

The latest setback for Toyota comes in sharp contrast to news that the maker earned $1.7 billion during the October-December quarter, ironically due, in large part to hefty sales of its greener models, including the Prius, which is the best-selling vehicle in Japan and the top-selling hybrid-electric vehicle worldwide.

The FT-HC concept vehicle is expected to become part of a Prius hybrid brand-within-a-brand for Toyota.

It remains unclear what the automaker will now do with versions of the Prius produced before then.  But the Japanese Ministry of Transportation is ordering an investigation and urging a recall.

Here in the United States, the news is only likely to worsen a situation rapidly spiraling out of control for a company that desperately hoped to maintain some sense of having a handle on things in the wake of a series of recalls, including one ongoing issue requiring more than 4 million vehicles around the world to be repaired to correct a potentially sticky accelerator that can lead to Toyota products racing out of control.

Yesterday, U.S. Transportation Secretary Ray LaHood told a Capitol Hill subcommittee owners of the defective Toyota vehicles shouldn’t drive them, but later said he “misspoke” and said motorists should get them repaired as soon as possible. LaHood earlier in the week called Toyota “safety deaf,” and regulators were already looking at the possibility of levying civil fines against the company even before the possibility of a Prius cover-up was announced.

Owners of the 2010 Toyota Prius have been reporting problems with the vehicle’s brakes since shortly after it reached market, last year, with dozens of complaints already on file with American safety regulators.  A number of owners have also described the experience to TheDetroitBureau.com. Owners of earlier versions of the Prius are also coming forward with similar complaints.

“I hit a bump, pothole or bumpy road surface, apply the brakes at the time and they seem to either not catch at all or catch and release,” explained owner George Kasica. “It’s like a feeling of no braking action at all. Zero. Releasing the pedal and reapplying the brakes seems to fix the issue.”

The explanation has to do with the compound nature of the brakes on the Prius, it turns out.  Initially, the vehicle tries to recapture energy through a process known as regeneration, sending current to the car’s battery pack.  Under more aggressive braking, or if the Prius loses traction – on an icy surface, for example, or after hitting a bump – conventional hydraulic brakes kick in. There can be a lag that leaves a driver feeling like the brakes have stopped working.

Reprogramming the computer controlling the brake function on the Prius was among the steps apparently taken by Toyota to address the problem, last month.  The question the company has yet to answer is how it plans to fix versions of the 2010 Prius or earlier models already on the road.

Industry analysts, including Dave Sargent, head of automotive research at J.D. Power and Associates, have warned that adding Prius to the growing list of Toyota’s safety problems could be devastating to the automaker’s image.  Though it is a relatively modest part of the overall line-up in the States, the hybrid is the heart of Toyota’s campaign to present itself as a customer and environmentally-friendly manufacturer.  It was the centerpiece of a record $1 billion U.S. marketing campaign during the fourth quarter.

Problems with the Prius, said Sargent, would send the message to consumers that Toyota’s problems were “not just a one-time problem but systemic.”

The damage to the Prius nameplate itself couldn’t come at a worse time.  At the Detroit Auto Show, last month, Toyota unveiled a smaller dedicated hybrid that is expected to become part of a Prius brand-within-a-brand of gasoline-electric vehicles.

Mounting criticism led Jim Lentz, president of Toyota Motor Sales USA, to stage a media blitz, this past Monday, the same day the maker announced the details of it planned fix for the sticky accelerator.  But Toyota’s defensive mea culpa quickly became the target for comics and commentators, including CBS Late Night host David Letterman and the Daily Show’s Jon Stewart, who used clips of Lentz in a skit dubbed “The Toyota Telethon of Death.”

In Japan, following the latest revelations about Prius, Toyota Senior Managing Director Takahiko Ijichi told the Associated Press, “”We have not sacrificed the quality for the sake of saving costs.  Quality is our lifeline. We want our customers to feel safe and regain their trust as soon as possible.”

How soon that could happen is increasingly uncertain, what with new revelations about safety defects – and the way the Japanese maker has handled them – surfacing every day.  But what Toyota has regained is profitability, after posting a record loss last year.  And though it was originally expecting to drop into the red again during the fiscal year ending March 31, Toyota officials now say they expect to be back in the black.

For how long is uncertain, however. The company is offering its first estimate of the cost of its recalls, a figure Lentz, on Monday, said it had not yet calculated.  On a global basis, the latest accelerator recall is expected to cost $2 billion, including about $1.1 billion for direct repairs. The rest will cover lost sales, and is just an estimate. It could be much higher.

After announcing the problem with sticky accelerators, Toyota said it would halt sales of eight U.S. models – a figure later matched in Europe – and temporarily shutter five North American assembly plants.  Those facilities will be back in operation next week, just in time for a Congressional hearing about its conduct in safety recall matters.

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