×

Prius Problems Could Stall Brand

2010 Prius
Source: toyota.com
2010 Prius

Now even Toyota's golden child is tarnished. Early this morning in Japan, Toyota announced that there was a design flaw in the anti-lock brakes of third generation Prius models made up until January of last year.

After that, Toyota corrected the problem.

Talk about a shot in the gut.

The Prius problems are small relative to the millions of cars recalled for unintended acceleration, but this will hurt Toyota.

Put aside questions about why Toyota knew of about brake problems in the Prius but didn't say anything about it until now. That's a separate issue that will tick off Toyota customers. Focus instead on what this means for the Prius brand name.

Ever since Toyota introduced the first Prius, the gas-electric hybrid has been hot. Last year Toyota sold almost 140,000 models here in the U.S. When gas prices spiked in 2008, there were waiting lists stretching for months and buyers willing to pay $5,000 over sticker for the gas-sipping car. Prius has been so strong, Toyota has considered spinning it off into its own brand.

Now, its reputation has been sullied. Will the Prius die because of this brake problem? No. Will it make people think twice when buying and instead consider other hybrids? You bet. The Ford Fusion Hybrid could be the winner.

__________________________

Click on Ticker to Track Corporate News:

- Ford Motor

- Toyota Motor

- Nissan

- Honda Motor

___________________________

Questions? Comments? BehindTheWheel@cnbc.com