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Thursday, March 4, 2010

Toyota Prius tops Japan sales despite recall woes

Toyota's Prius remains the top-selling car in Japan despite the automaker's global recall woes that included braking problems with the hit hybrid.

More than 27,000 of the gas-electric hybrids were sold in February, making the Prius the best selling model for the 10th straight month, according to Japan Automobile Dealers Association figures released Thursday.

The continued popularity of the Prius comes despite Toyota's recall debacle affecting 8.5 million vehicles around the world, including the third-generation Prius in Japan, recalled for a glitch in antilock braking. But the safety concerns and bad publicity have hurt sales of Toyota models in the U.S. — the automaker's biggest market.

Sales of the Prius have been boosted by its reputation for delivering superb mileage by switching between a gasoline engine and electric motor as well as tax breaks and other government incentives.

The Prius, also the world's top-selling hybrid, has been so popular in Japan that it has a big backlog of orders, with a waiting list lasting about six months.

"The reaction within Japan has been very calm," said dealers' association spokesman Kentaro Nakata. Cancellations of Prius orders are extremely rare, he said. "There are people waiting to snatch up the car. The Prius is seen as the pioneer of hybrid technology, and its brand image is solid."

Toyota's handling of the quality lapses, which emerged in the U.S. last year, has received widespread media attention in its home market but loyalty to Toyota remains relatively strong because the other defects behind the recalls — sticky gas pedals and faulty floor mats — have not affected any models sold in Japan.

Toyota Motor Corp., the world's biggest automaker, began offering new software to fix the braking problem on the Prius and two other hybrid models last month. The company said most of the fixes are expected to be completed by the end of March. It did not have a comment on Prius' topping the Japan sales rankings.

"Sales aren't likely to taper off until next year," Mamoru Katou, analyst with Tokai Tokyo Research, said of the Prius. "Sales are going strong despite the big fuss, although there are some cancellations."

Katou says February's sales reflect demand from buyers who had placed orders before the recalls, and the car's longer-term success remains uncertain as the Prius is expected to face competition from rival models.

In Japan, Honda Motor Co.'s Fit subcompact was second in sales in February at nearly 14,000, followed by three of Toyota's smaller models, the Vitz, Passo and Corolla.

Honda's Insight hybrid has not fared as well as the Prius, sinking to No. 24, after briefly reaching No. 1 before the remodeled Prius went on sale in May.

Partly behind the decline in Insight sales was the introduction late last month of the CR-Z, a sporty hybrid, with advance orders already topping 5,000, according to Honda, the nation's second biggest automaker.

The Tokyo-based automaker is targeting monthly Japan sales of 1,000 for the CR-Z. Honda said Thursday cumulative Insight sales in Japan since it went on sale in April reached the 100,000 mark.

There have been no high-profile accidents or drivers complaining publicly of unintended acceleration in Japan, as there have been in the U.S., where Toyota's once stellar reputation for quality is getting hammered.

Toyota U.S. sales for February dropped a smaller-than-expected 9 percent year-on-year, according to data released Tuesday. Toyota is offering zero-percent financing on most models this month plus two years of free maintenance to returning customers in the U.S.

Other automakers, including U.S. automaker Ford Motor Co. and Hyundai Motor of South Korea, saw U.S. sales recover from February 2009, when demand was hurt by the recession.

Nakata expects Prius sales to continue to be strong in Japan.
"As far as we can see, we can barely feel any effect from the overseas recalls," he said

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