Toyota’s woes mount as Prius recall considered

Toyota faces probes of brake problems with its latest model Prius in the US and Japan but remains tight-lipped about adding the gas-electric hybrid to the millions of cars it has recalled

The damage to Toyota Motor Corp's image is growing by the day with the automaker now considering a US and Japanese recall of its Prius hybrids—the vehicle that's a symbol of its technological prowess and green car ambitions, reports AP.

The beleaguered automaker faces probes of brake problems with its latest model Prius in the US and Japan but remains tight-lipped about adding the gas-electric hybrid to the millions of cars it has recalled. Toyota is also investigating possible brake problems with its luxury Lexus hybrid. Nihon Keizai, Japan's top business newspaper, said on Friday that Toyota would soon notify the country's transport ministry and the US Department of Transportation of a recall of 270,000 Prius hybrids.

Toyota said it is considering a recall but no decision had been made. "Nothing has been decided on whether we will recall or not," spokeswoman Ririko Takeuchi said.

Some owners of the 2010 Prius have reported that their brakes do not always engage immediately when they press the brake pedal, or that the brakes have an inconsistent feel. The problem has been fixed with a software programming change for Prius vehicles sold in Japan and overseas since late January but not for vehicles sold before then.

The US National Highway Traffic Safety Administration said it would assess the scope of the problem in the Prius and the safety risk to about 37,000 cars that could be affected.

Toyota, however, has said that it sold 103,000 of the new Prius in the US since May last year.

The investigation comes as safety questions surround Toyota, which has already issued broad recalls for millions of its best-selling vehicles, including the Corolla and Camry, because of gas pedals that can become stuck.

US officials have blessed Toyota's solution to that problem, a small piece of steel designed to eliminate excess friction in the pedal mechanism, but have criticised Toyota for being too slow in responding to customer complaints.

Takeuchi said Toyota is also investigating possible brake problems with its luxury Lexus hybrid, which uses the same brake system as the Prius. Toyota has not received any complaints about the Lexus HS250h and the probe is to ensure safety, she said.

Congressional investigators expanded their review of Toyota to include the Prius as California Rep Darrell Issa, the ranking Republican on the House Oversight Committee, asked Toyota for records on its Prius brakes.

The committee plans a hearing next week on Toyota's recalls, the first of two in Congress this month. Mr Issa said he would focus on whether Toyota or NHTSA failed to properly deal with safety complaints or address them quickly enough.

"We think they should have acted more aggressively or quickly," said Mr Issa, who owns four Priuses, none of which fall under the investigation.

Connecticut attorney general Richard Blumenthal said that he and attorneys general in other states may take legal action against Toyota over possible deceptive claims to consumers about the safety of the company's cars.
 

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New Google book settlement still raises antitrust concerns: US

The US Justice department has opposed a revised legal settlement reached between Google and American authors and publishers that would allow it to scan and sell millions of books online

The bid by the world's largest search engine Google to get digital rights to millions of hard-to-find books has run into legal hurdles with the US Justice department saying that it threatens to undermine copyright laws, reports PTI.

The Department has opposed a revised legal settlement reached between Google and American authors and publishers that would allow it to scan and sell millions of books online.

In an opinion filed in a New York Federal Court on Thursday, the Justice department said that the amended settlement raises anti-trust concerns.

"The amended settlement agreement suffers from the same core problem as the original agreement, it is an attempt to use the class action mechanism to implement forward-looking business arrangements that go far beyond the dispute before the court in this litigation," the Department of Justice said in its statement in the court.

The government action is a major setback to Google's efforts to win approval for a 15-month old legal settlement that would make it a storehouse for millions of books.

The Justice Department's advise to the court comes even as consumer watchdogs, literary agents, foreign governments and state governments in the US have already filed objections before a US district judge to reject the agreement.

Judge Denny Chin is to hold a hearing on 18th February to consider approving the class action settlement.
 

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Bankers paid out of their pocket for NTPC issue

Apart from managing the issue at zero fees, lead managers are even paying all other expenses such as legal and listing fees

The Indian government is planning to raise as much as Rs30,000 crore through disinvestment of state-run units, but it has refused to pay any fees and even expenses to the merchant bankers involved in running the public offers or follow-on public offers (FPOs). The cost of the NTPC issue runs into crore of rupees but the government thinks it is doing a favour to the lead managers.

According to an investment banker whose company declined to be part of the NTPC issue, the government has even asked the lead managers to bear the costs involved in the FPO themselves, saying that a mega-FPO like NTPC will add value to their track record.

A public issue involves a number of expenses like printing, listing fees, legal expenses and stamp duty, among others. The cost of the public issue is normally 8% to 12% of the issue size.

Several bankers thought that while it is still okay to manage an issue for zero fees, they would not pay out of their pocket for the privilege.

The current lead managers for the NTPC issue are ICICI Securities Ltd, JP Morgan India and Kotak Mahindra Capital Ltd. They have not been paid any underwriting, brokerage or management fees. On top of that, the four lead managers would have to pay out expenses of around Rs4 crore each from their own pockets.

According to sources close to the issue, Bank of America, DSP Merrill Lynch Ltd and Kotak Mahindra Capital Co Ltd, the lead managers running the Rural Electrification Corp Ltd (REC) FPO, which opens on 18th February, will only be reimbursed their expenses and the government would not pay any management fees to them.

The NTPC issue opened on 3rd February and according to data from the NSE and BSE websites, as of 4th February it had received combined retail investor subscription from 1,42,800 investors. The issue closes on 5 February 2010.
 

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COMMENTS

Shibaji Dash

7 years ago

Somebody asked this question :' Any difference between the political masters and the merchant bankers?'Not waiting for a response there followed this reply: 'None. They all are like lottery companies.The mandarins of North Block are like the merchants of John & Company or the East India Company and, the bankers - merchant or otherwise- are pretty strong tails wagging the dog that barks at and bites the retailer/common man. Then the friends-listeners who were asked to identify the dog said : ' sala, bahut knowledgeable hai '.

P.V.Maiya

7 years ago

Plain humbug that the investment bankers happily absorb the costs and work for no fee to gain prestige, and the Govt is doing a big favour to the investment bankers.What they dont get by way of fees &costs,they earn even more by 'underpricing ' the issue price. Connected entities with deep pockets buy/invest in the 'underpriced' issue and unload for a profit later. The Govt negotiatiors congratulate themselves on how they squeezed the investment banks while being apparently unaware of how the issuer gets sqeezed smoothly on pricing. The moral: pay for the services and be hard on pricing.

R Balakrishnan

7 years ago

The retail response is virtually absent at this stage. Wonder who the smart institutional investors are who have put in other people's money in to this offering at this juncture in the market.

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