Toyota May Have A Problem On Its Hands

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Its reputation is on the line for one.

Toyota's squeaky clean image as an automaker that avoids controversy and builds some of the most reliable cars on the planet is having that persona come into question this week after the LA Times reported on a lawsuit against the company from one of the automaker's dealerships. While the lawsuit focuses on a dispute between Toyota and the dealership, the catalyst of the disagreement is a problem that may affect over 800,000 Prii (the plural word for Prius according to Toyota).

Toyota has tried to fix that problem through three separate recalls during which technicians installed a software update, the first taking place in 2014 and the last in 2018, but The Times' report alleges that these fixes haven't worked.

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The problem in question is a failure of the electric powertrain caused inverter transistors that could fail and cause the car to shut down while on the road. Repairing it was supposed to be simple - no more than a software update that would put the car in limp home mode rather than shutting it down in the case that its inverter transistor failed and power went out - but the lawsuit, filed by Roger Hogan, the owner of two Toyota dealerships in California, claims that the fix isn't working.

The Times claims that as many as 20,000 Prius owners have reported powertrain failures since the recall was issued. Hogan's suit, however, is not about whether Toyota did enough to fix the issue. Instead, it has to do with his allegations that the automaker blocked his dealership from new car allocations after he raised concerns to the company and the NHTSA, causing him to lose millions of dollars of profit.

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Hogan apparently refused to sell affected cars that were in his inventory even though it was legal for him to do so because he didn't believe Toyota's fix was working.

Whether Hogan wins the tens of millions of dollars he's suing the automaker for or not, the real winner in this picture could be Toyota, which has so far saved billions by issuing a software fix to a problem that, if Hogan is right, actually requires a more expensive hardware remedy. Regardless, the Prius may not even be around long enough for a settlement to be worth it.

This story has been updated to accurately reflect Prius models affected by the issue.

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