Toyota recalls new Prius in safety fix

Shares in Toyota, which lost about a fifth of their value since late January, closed up 2.9 percent as the market welcomed signs that the problems were finally being addressed.

But the carmaker faces long-term fallout from the crisis, analysts said.

"The wave of media and government attention will not subside quickly, with lasting damage now looking unavoidable," said IHS Global Insight analyst Paul Newton.

Toyota is likely to lose over 10,000 sales for both January and February, Newton predicted.

The effects in the coming months will depend on how quickly Toyota can get a fix into production," he said. "The longer-term effects from lost sales to younger buyers could be much more serious, however," he added.

The latest model Prius is sold in some 60 countries and is a hugely important model for Toyota, which is betting on the hybrid to maintain its lead in low-emission vehicles. The Prius was Japan's top-selling car last year, a first for a hybrid.

"Toyota has been, beyond any doubt, the top player in the hybrid car segment and the fact that Prius and other hybrid models will be part of this massive recall significantly dents its image" and opens the door for competitors, said Suh Sung-moon, an analyst at Korea Investment & Securities in Seoul.

GLOBAL RECALL

Toyota said it was recalling a total of 437,000 units of its 2010 Prius, Sai, Prius PHV (plug-in hybrid) and Lexus HS250h hybrids globally, including 155,000 in North America, 223,000 in Japan and 53,000 in Europe.

Toyota said repairs to fix the problem would take around 40 minutes per car and, in the meantime, pressing hard on the brake pedal would stop the vehicle.