UPDATE 5-Toyota halts Lexus SUV sales after safety warning

* Toyota asks U.S. dealers to suspend sales of Lexus GX 460

* Consumer Reports warns: 2010 Lexus ‘safety risk’

* Toyota says no decision yet on action in other markets

* Toyota shares up 0.4 pct, matching Nikkei rise (Adds Toyota, analyst comments, recasts)

By Kevin Krolicki and David Bailey

TOKYO/DETROIT, April 13 (Reuters) - Toyota Motor Corp 7203.T has suspended sales of a new Lexus SUV in the U.S. market to investigate the risk for rollover accidents in the latest blow to the reputation of the world's largest automaker.

Toyota took the unusual action of stopping sales of the 2010 Lexus GX 460 after Consumer Reports urged shoppers not to buy the sport utility vehicle, calling it a “safety risk” because of a potential handling problem in certain turns.

Toyota, which also sells the Lexus GX in the Middle East, Oceania and Russia, said no decision has been made on whether sales would be suspended in those markets as well.

Although the luxury SUV is a low-volume model for Toyota, the potential problem with its stability control adds to the toll from a safety crisis that has cost Toyota billions of dollars in lost sales and forced it to resort to cut-rate pricing.

Shares of Toyota, which have are up 13 percent since early February, opened lower but were up less than half a percent in morning trade in Tokyo on Wednesday.

The stock remains down 11 percent from late January when the first in a series of large recalls was announced.

“Our understanding is that there is no problem with models other than the GX 460, since we have not received reports of problems,” said Toyota spokeswoman Mieko Iwasaki.

Toyota said its engineers were “vigorously testing” the SUV to identify the risk cited by Consumer Reports. The magazine said its own testing found the Lexus was prone to slide when driven in sweeping turns.

The rare warning from the nonprofit magazine, which is seen as an objective voice on auto safety and quality in North America, stands out because its past endorsements have been credited as one reason for Toyota’s steady sales growth.

Toyota has sold about 5,400 of the Lexus GX 460 SUVs in the four months since it has been on the market. The GX, which is based on the same platform as the off-road ready Toyota 4Runner, starts at just over $50,000.

A similar SUV has been sold in Japan and elsewhere as the Prado although the new version of the Lexus GX is now substantially different, Toyota’s Iwasaki said.

The automaker said it would provide a loaner vehicle until a remedy is available to owners who are concerned.

The last time Consumer Reports concluded that a vehicle was “not acceptable” for consumers to buy was in 2001, when it warned consumers away from the Mitsubishi Montero Limited.

“This is the last thing Toyota needs right now,” said IHS Global Insight analyst Aaron Bragman, who said it was more likely that Toyota would have to continue to resort to steep discounts of up to $5,000 to win back consumers.

Toyota has struggled under massive recalls due to defective sticky accelerator pedals and the potential for floormats to entrap the accelerator. The sticky accelerator pedals also led to U.S. sales and production halts.


U.S. safety regulators have proposed a record $16.4 million fine against Toyota, the highest allowed, accusing the automaker of knowingly delaying a recall over the defective accelerator pedals and may seek more penalties. The recalls also sparked congressional hearings and numerous lawsuits.

The automaker’s U.S. sales fell 16 percent year-over-year in January and 9 percent in February before rising 41 percent in March under unprecedented incentives.

U.S. officials are continuing a probe into whether unintended acceleration, which Toyota has attributed to mechanical issues, also could have been caused by electronics issues.

The GX represented about 10 percent of U.S. Lexus sales in the first quarter, industry-tracking firm said.

But Dennis Virag, president of the Automotive Consulting Group, said the problem identified by Consumer Reports could bring renewed attention to potential software glitches.

Some safety advocates have suggested such problems could be behind reports of unintended acceleration in Toyota vehicles, a claim the automaker says there is no evidence to support.

“It is another chink in their armor and an indication that perhaps they do have software problems not only in this vehicle but in other vehicles as well,” Virag said.

Consumer Reports said the sliding its test drivers found in the GX 460 could cause rollover accidents resulting in serious injury or death. It said it knew of no reports of such accidents.

It said the risk of a rollover accident in the GX 460 was significant because it is a tall SUV with a high center of gravity. No other SUV had slid as far as the Lexus in its recent testing, including the Toyota 4Runner, the magazine said. (Additional reporting by Soyoung Kim in DETROIT, Chang-Ran Kim and Taiga Uranaka in TOKYO; Editing by Andre Grenon and Lincoln Feast)