It is expected that Toyota Prius may be recalled in the US and Japan sometime this week.

Toyota Prius was supposed to be the hybrid car of the millennium and it had managed to get a lot of good press in the past few months. However, as of today, some 270,000 Toyota Prius cars are likely to be recalled to fix an issue with the braking system of the car that can possbily cause instances of brake failures, leading to safety risk for drivers. It is not sure as to how Toyota will recover from this onslaught because it has already been reeling under immense pressure due to an earlier recall notice that affected 2.3 million vehicles.

The latest reported glitch with Toyota Prius follows an announcement of a recall of millions of vehicles due to issues with the accelerator pedal. The Japanese Government had to ask Toyota to investigate complaints of brake failures by Japanese drivers. And upon an investigation, it was found that the anti-lock brake system could cause the brakes not to work as they should. This, obviously, is a risk for drivers and hence the respective Governments of Japan and US had to get involved in getting Toyota to address the issue.

Toyota Prius’s brake glitch seems to be a software problem and currently impacts the 320,000 Prius cars that been sold this year. Most of these cars have been sold in Japan and the US, and hence a recall is expected to be announced sometime this week or possible next week. While Toyota is already reeling under the recall of 2.3 million vehicles that had to be recalled due to the accelerator pedal problems, the latest glitch is going to further dent the brand and reputation of Toyota.

Toyota is going to lose a lot in the short-term and medium-term. Its strategy to win over customer confidence will be the deciding factor on whether the loses percolate to longterm revenues. The loss to the company has been unthinkable; $33 Billion erosion of market value and a 22% dip in the stock value bears a testimony to the lost customer confidence. On top of this, Toyota has to cope up with 29 lawsuits that have been filed in multiple Courts of the US and Canada to claim damages from the automotive manufacturer.

The figures look very bad for Toyota and nobody is accounting for the loss of value on account of loss of confidence amongst the customer base. If you look at the intangible costs of lost-customer confidence then the losses for Toyota will run in billions of dollars and it will take them an extended number of years to come out of this mess. For now, the company seems to be walking cautiously and still in a quandary on whether to call the Prius or not.

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