Japanese auto giant Toyota suffering due to faulty gas pedals. Photo credit: Andrei Vassiliev

Adding to their raft of woes, Toyota announced yesterday that the brakes on some of their 2010 hybrid the Prius might be faulty, raising the spectre of yet another vehicle recall and prompting the US Department of Transportation today to announce an investigation. Toyota’s stock has been steadily eroding over the last few months, as has its credibility as a gold-standard automaker.

Chris Vander Doelen in the Vancouver Sun wrote that Toyota’s problems have progressed beyond a “merely epic public relations disaster”, characterizing it as a “reputational meltdown” on par with golfer Tiger Woods’s meteoric fall from grace. But it’s not just Toyota’s sales – which have hit their lowest point since 1998 – and its reputation that are at risk: Thousands of jobs all of the world could be pulled down with the auto titan.

And how has Toyota handled this more than epic public relations disaster? According to The Financial Times reporter John Reed, not very well. Reed wrote yesterday that while Toyota has managed the technical aspects of the global recall well, the company receives only “middling marks” for how to spoke to its customers and the public at large. That, he writes, could damage the carmaker’s already tarnished reputation.

So who stands to gain from Toyota’s fall? TIME magazine reported on Tuesday that while conventional wisdom would say Ford, analysts are pointing to bailout recipients, GM and Chrysler. But more likely than not, import customers in America are more likely to stay with imports – and it’s longtime rival, Honda, wo might take the lion’s share of Toyota’s fleeing customers.

But the bigger problem, industry expert Jack Nerad wrote on CNN.com yesterday, is that Toyota’s plight threatens to bring down the entire car manufacturing industry. Nerad says that after such a “cataclysmic year” for American automakers, 2010 opened with hope for the industry – until Toyota’s recall began to take on epic, global proportions. “[T]he situation can have nothing but a negative effect on an overall auto industry already brought to its knees by consumer credit woes, unemployment and the generally negative economic climate,” he wrote. “Will consumers who were about to purchase a Toyota turn to alternative brands or will they just sit on their wallets until the smoke clears? It is highly likely that a percentage of potential car buyers simply will decide to wait and see what happens.”

Meanwhile, some green warriors in San Francisco are experiencing a crisis of faith in their trusty steed, the Toyota Prius. The New York Times reported yesterday that City CarShare, a local nonprofit, took eight brand-new Priuses out of their fleet after Toyota’s announcement on Wednesday. Steve Wozniak, co-founder of Apple, even weighed in, claiming that his Prius has a wonky accelerator; he also claims that both Toyota and the National Highway Traffic Safety Administration neglected to respond to his concerns.