Toyota has announced a recall of all Prius cars made between 1997 and 2003. Image from Wikimedia Commons.

A fault in the power steering system has led to a Toyota Prius recall that applies to every Prius made until 2003, including the first to roll off the assembly line. Nuts in the power steering system can come loose and cause the vehicle’s steering to become unstable.

First Prius ever made affected in recall

Toyota Motor Company, which has issued several recalls in the past two years, has announced a recall of the highly popular Toyota Prius hybrid because of a problem with the power steering system, according to MSNBC. The recall effects every Prius made from 1997 to 2003. In Japan, there are 48,000 affected vehicles from model years 1997 to 2003. Worldwide, the 2001 to 2003 model years are affected, as Toyota did not begin selling the Prius in any foreign markets until 2001. Outside Japan, there are 58,000 Prius units from the affected model years. Of those, about 52,000 are in the United States, about 1,800 in the United Kingdom and 800 in Germany. In total, 106,000 cars are being recalled.

Toyota will fix for free

The Prius recall has been announced over concerns with low-quality nuts in the power steering system, according to AutoWeek. The nuts that secure the pinion shaft to the steering gear box can become loose with wear, causing the steering to become compromised and left turns to become incredibly hard to execute. The loosening will occur, according to MotorTrend, as the wheel is turned to the full lock position rapidly numerous times, which is likely to happen over a car’s lifetime. The fix, which is to install better nuts that will not loosen over time, takes about four hours, and Toyota will complete it at no charge. There has been only one accident, according to USA Today, and it was minor. The first complaint of the problem was made in August of 2007, in Japan. One complaint in the U.S. and 28 in Japan have been made concerning the steering gear box issue.

Toyota plans return to full production

Toyota has announced that it expects to be returning to full production capacity soon. Toyota’s production facilities in Japan, along with other Japanese auto manufacturers, were severely affected as a result of the earthquake and tsunami that devastated Japan earlier this year. However, the car maker says that it is on track to recover from the March 11 disaster faster than expected. Toyota’s operations in Japan are expected to return to 90 percent pre-earthquake capacity nearly immediately. Global operations in Thailand, China and Europe are expected to be at 100 percent capacity this month. Toyota is jumping on this recall as early as possible. The car maker has been publicly rocked by the massive Toyota recalls in the last two years that resulted in more than 14 million cars being recalled.

Sources

MSNBC

AutoWeek

MotorTrend

USA Today

Are you seeing this, Standard & Poor's?

Toyota is a brand that has been synonymous with quality over the years. While they remain a high-quality automaker, the recent Toyota recall (including the little Prius braking problem) have but a bit of a damper on their financial outlook. Not only will it cost Toyota millions to perform the recalls, but Standard & Poor’s have downgraded Toyota Financial’s credit rating in light of these questions regarding vehicle quality. Will shrinking credit mean shrinking Toyota prices, and hence the need for smaller car loans?

They’re officially on “watch negative”

The AA long-term CreditWatch for Toyota and Toyota Financial has been dinged, as have those of Toyota suppliers Denso, Aisin, and Toyota Industries. Standard & Poor’s suspects that the dip in Toyota Financial’s credit will not be resolved until May 2010 at least.

The official reason given for the downgrade is “increased concern over the potential negative impact on Toyota’s business risk profile of unfolding developments related to recent quality-related issues.” Stuck accelerators, improperly designed floor mats and defective braking systems in Japan and the U.S. have a tendency to do that, no matter how much the actual risk may have been overblown. Decreased sales and a business strategy that must accommodate for massive recalls are good for the bottom line in the short term, hence the credit rating decrease.

Toyota forecasts profit after major loss in 2009

We all know 2009 was a tough year for automakers. And for some, it goes back years before that. Toyota’s conservative fiscal policy (get it, GM?) has placed them squarely on the road to recovery, so the recall only took Toyota Financial and company down by a single notch. The Prius recall hasn’t even been figured into the rating yet. Thus, Standard & Poor’s continues to watch like a rubbernecker passing a horrible traffic accident, because of course things can always get worse.

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(Photo Credit: http://www.flickr.com/photos/tomeppy/ / CC BY 2.0)

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