Toyota recalls over 1.7 million vehicles globally

TOKYO Wed Jan 26, 2011 2:50am EST

TOKYO (Reuters) - Toyota Motor Corp said it was recalling more than 1.7 million vehicles worldwide, the latest in a string of recalls that have ballooned to nearly 16 million since late 2009, further denting the automaker's reputation for quality.

Shares of Toyota extended their decline after the announcement and closed down nearly 2 percent.

The biggest recall among those announced Wednesday was to fix a faulty fuel pump and connecting pipe in 1.34 million vehicles, including the Noah minivan and other models sold in Japan as well as 141,000 Avensis units sold overseas. That is Toyota's biggest recall in six years and its second-biggest ever for a single defect, said Toyota spokeswoman Shiori Hashimoto.

The latest recall will make it harder for Toyota to convince investors it has put its quality problems behind it a year after the world's No. 1 car company went into crisis after massive recalls worldwide to fix faulty brakes blamed in the fatalities of several drivers.

"Toyota faces harsh competition from Honda, which is in a much better situation in the U.S. market -- this is reflected in its stock price which now stands at multi-year highs," said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management.

"That's why investors are a little nervous and sold Toyota when this negative news came out," he said.

Toyota was the only major automaker to see its sales fall in the United States last year, and just squeaked by General Motors Co to keep its spot at the top of the global sales ranking.

Toyota said it was also recalling around 335,000 Lexus units sold overseas, including about 245,000 sold in the United States, due to trouble with a fuel pressure sensor connected to an engine fuel delivery pipe.

The recall of the Noah models sold in Japan covers those manufactured between May 2000 and October 2008.

In two other filings on Wednesday, Toyota said it would recall about 75,000 Crown models and about 6,200 Townace vans in Japan to fix the same fault found in Lexus cars sold in the U.S. and elsewhere.

Toyota said in a filing to Japan's transport ministry that no accidents had been reported because of the defects.

Toyota's Hashimoto, declined to say how much the latest recalls would cost the Japanese carmaker.

Toyota's last big recall was in October when it said it would fix 1.66 million Avalons, Highlanders and other models worldwide mainly for a defect in the master cylinder brake seal.

Toyota shares closed down 1.9 percent at 3,400 yen, underperforming a 0.6 percent fall in the benchmark Nikkei average.

Shares of Honda, Japan's second-largest automaker, gained 0.7 percent to 3,470 yen.

(Additional reporting Noriyuki Hirata, Tim Kelly and Antoni Slodkowski; Editing by Joseph Radford)