- Associated Press - Wednesday, January 26, 2011

TOKYO (AP) — Toyota recalled nearly 1.7 million cars worldwide Wednesday for fuel leaks, the latest in a ballooning number of quality problems that could add another dent to its tarnished reputation in the crucial U.S. market.

Toyota’s latest recalls are mostly in Japan, but they also include the IS and GS Lexus luxury models in North America, where the world’s No. 1 automaker faces the biggest obstacles to winning back customer trust.

Toyota’s U.S. sales lagged last year despite an industry recovery, putting General Motors Co. within reach of reclaiming its title as the world’s biggest car maker by number of vehicles sold. Toyota Motor Corp. became the top-selling automaker in 2008, dethroning GM after nearly 80 years of dominance.

There were no accidents suspected of being related to the latest recall, according to Toyota. The car maker said it had received 77 complaints overseas, 75 of them in North America, and more than 140 in Japan.

Koji Endo, auto analyst with Advanced Research Japan Co. in Tokyo, said the latest recall will cost Toyota about 20 billion yen ($240 million), and that won’t hurt its earnings performance by much.

“But there is that perception of here we go again, and that hurts Toyota’s image, especially in North America,” he said.

Toyota is likely trying to be aggressive with recalls, carrying them out quickly before they turn into bigger problems, and so the latest one is not a sign that quality is taking another plunge for the worse at the automaker, Endo said.

Still, the manufacturer — whose “Toyota Way” production methods have been praised and emulated around the world — can’t hope to claim to have put the problems behind it either.

The largest number of the affected vehicles was in Japan at nearly 1.3 million — the second-largest auto recall in the nation’s history — and involving two different problems.

The biggest recall in Japan was in 2005, also by Toyota, when nearly 1.3 million Corolla cars were recalled for a faulty headlight switch and some other problems, according to the Japanese transport ministry.

The latest quality hitch comes on top of the spate of massive recalls that began in late 2009, mostly in North America and which now cover more than 12 million vehicles.

Toyota has been struggling to regain its once solid reputation among buyers for producing reliable vehicles. The biggest damage to Toyota’s image has been in the U.S. where its response was seen as dallying.

The recalls since late 2009 include defective floor mats and gas pedals that get stuck, some of them suspected of causing unintended acceleration or runaway vehicles.

In one of the problems announced Wednesday, an improper installation of a sensor to measure fuel pressure may cause the sensor to loosen as a result of engine vibration over time, and possibly cause fuel leakage, the company said. That problem also affects 280,000 Lexus cars sold abroad, 255,000 of them in North America and 10,000 in Europe.

Included under that recall are the 2006 through 2007 Lexus GS300/350, 2006 through early 2009 Lexus IS250, and 2006 through early 2008 Lexus IS350 sold in the U.S.

Story Continues →