Toyota Motor Co. is facing huge losses after recalling and suspending sales of eight of its best-selling vehicles over a potentially dangerous problem caused by a part made in Canada.

Toyota’s decision to suspend Canadian and U.S. sales of eight of its most popular models -- including the best-selling Camry -- follows reports last week about problems with gas pedals in some models. Those problems have been traced to a plant in Mississauga, Ont.

Toyota initially thought the problem was caused by floor mats jamming up against the vehicles’ accelerator pedals, but soon determined that it was far more serious.

The suspect parts at the heart of the massive recall have been traced to the Mississauga, Ont., plant owned by Toyota supplier CTS Corp., according to a report Toyota handed to the U.S. National Highway Traffic Safety Administration last week.

CTS Corp., based in Elkhart, Ind., says it knows of only a few cases of drivers having problems with accelerators.

The supplier says Toyota told it about fewer than a dozen cases in which drivers struggled with pedals and was not aware of any cases where the pedal became stuck after drivers pushed it down, potentially causing unwanted acceleration.

CTS, which has more than 5,000 employees, says it is working with Toyota to design a new pedal.

Toyota insisted that the affected vehicles were not a safety risk.

“They are absolutely safe to drive,” Toyota spokeswoman Sandy de Felice told CTV Toronto. “It’s a very gradual condition that occurs over long usage of your driving in the vehicle.”

“We remain absolutely confident in our product and in our brand.”

Kane said the recalls and subsequent suspensions were unprecedented and possibly very expensive moves that could deal a stunning blow to the company’s reputation and its fledgling earnings recovery.

“It’s a very, very big problem for Toyota,” Kane said. “Stopping production is one thing, stopping selling for an unknown length of time is a major expense for Toyota. It’s unprecedented: I haven’t heard of anything like this ever happening before.”

U.S. car rental companies are pulling thousands of Toyotas from their fleets over the accelerator concerns.

Avis Budget Group Inc. say it is immediately removing about 20,000 Toyotas from its rental fleets, while Enterprise Holdings is removing all Toyota and Pontiac Vibe vehicles covered by the recal from its Alamo Rent A Car lots, Enterprise Rent-A-Car and National Car Rental chains.

In overnight trading in Japan, Toyota’s shares tumbled 4.3 per cent.

Toyota said it will suspend production at several manufacturing plants across North America, including those that produce Corolla, Matrix and RAV4 vehicles in Canada. The stoppage will take effect during the week of Feb. 1, "to assess and co-ordinate activities," Toyota said in an email to employees.

It’s not clear how long production will remain at a standstill, but the stoppage will affect plants in Cambridge, Ont., and Woodstock, Ont., where the company employs some 5,900 people. The company says workers at those facilities will not be sent home but have the option of receiving additional training, taking vacation time or unpaid leave.

Workers at Toyota plants in Kentucky, Indiana and Texas will also be affected. The company’s Japanese factories will not be affected, but the problem could spread to Europe, where similar accelerator parts are used, and could affect millions more vehicles.

The recall, which affects roughly 2.3 million vehicles in the U.S. and 270,000 in Canada, was announced last week after reports emerged about problems with the accelerators in some models.

The models affected by the recall are:

  • 2009-2010 RAV4
  • 2009-2010 Corolla
  • 2009-2010 Matrix
  • 2005-2010 Avalon
  • 2007-2010 Camry
  • 2010 Highlander
  • 2007-2010 Tundra
  • 2008-2010 Sequoia

The Camry was the best-selling midsize sedan in the U.S. as of December, with 34,000 units sold. Combined sales of the Corolla and Matrix there totalled 34,220 in December.

With files from The Associated Press and The Canadian Press