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Toyota Agrees to Sludge Settlement for Consumers

Class Action Suit Brings Relief to 3.5 Million Toyota, Lexus Owners

Consumers saddled with sludge-clogged Toyota engines may soon get some help from the Japanese auto giant under the terms of a class-action lawsuit settlement that covers roughly 3.5 million Toyota and Lexus vehicles damaged by engine oil sludge.

An engine gummed up with oil sludge can cost thousands of dollars to repair and in many cases must be replaced. The class action settlement could potentially cost the automaker hundreds of millions of dollars.

The agreement will allow consumers whose claims have been denied by Toyota to submit those claims to a third-party mediator at no cost for binding arbitration.

The lawsuit, filed in a Louisiana district court, could receive final approval by the middle of February. Details of the settlement are being mailed to 7.5 million current and previous Toyota and Lexus owners.

The agreement provides owners of sludge-damaged Toyotas eight years plus 120 days from the original purchase date to file a complaint.

Toyota consumers who have repaired their sludge-damaged engines may be able to recover their costs. The car only needs to show evidence of oil sludge damage.

The terms of the settlement are transferable to future vehicle owners.

Toyota owners have repeatedly written ConsumerAffairs.com detailing Toyota's attempts to blame sludge problems on inadequate vehicle maintenance by the owner.

Charles in Arkansas said: "At 36,000 miles the engine gummed up and quit running. My wife had the oil changed at Wal-Mart and did not keep receipts for the oil changes. The North Little Rock dealer and the Toyota representative told us such problems were rare and that we had caused the problem but for $2,500 they could fix it. They inferred that my wife was a liar," he wrote.

With the new agreement, consumers need only show reasonable maintenance in terms of oil changes.

Toyotas covered by the Louisiana settlement include the:

• Camry 4 cylinder from 1997-2001,
• Camry 6 cylinder from 1997-2002,
• Camry Solara 4 cylinder from 1999-2001,
• Camry Solara 6 cylinder 1999-2002,
• Sienna 6 cylinder from 1998-2002,
• Avalon 6 cylinder from 1997-2002,
• Celica 4 cylinder from 1997-1999,
• Highlander 6 cylinder from 2001-2002,
• Lexus ES 300 from 1997-2002 and
• Lexus RX 300 from 1999-2002.

In 2002 Toyota admitted receiving 3,400 complaints about sludged engines and the automaker extended its vehicle warranty to eight years along with unlimited mileage to owners of 1997-2002 Toyota and Lexus vehicles equipped with 3.0-liter V-6 or 2.2-liter four-cylinder engines.

At Toyota dealerships, however, consumers have encountered repeated denials from service managers insisting that sludging occurs primarily when owners fail to change their oil frequently enough.

Lauren wrote ConsumerAffairs.com from Tampa, Florida that, "My check engine light came on once again so I immediately returned to Stadium Toyota. The next day, I received a call from Stadium Toyota telling me that my engine is damaged due to engine sludge and it will cost me $4,500 to fix it."

In Lawrenceville, Georgia Valerie ran into a hostile dealer despite Toyota confirming her vehicle was "part of their oil gelling/sludge program. The service dept at the dealership says that I'm not entitled to anything," she wrote.

In Apex, North Carolina Jan heard the bad news from her Toyota dealer.

"They checked it over, then called and said that the engine had sludge in it and it needed a $7,000 to $8,000 repair," she wrote.

"They also said it was my fault, because the oil had obviously not been changed properly. When I purchased the car, the Toyota dealer talked me into a $999 extended warranty plan, which he assured me would cover any major issues that might come up with a car. It is called their Tender Loving Care package."

Edward from Parma, Ohio received the Toyota brush-off despite promises of an extended warranty.

"I called the dealer and was basically told by their customer service manager that they refused to do anything and did not care if I chose to file a lawsuit or anything else, Edward told ConsumerAffairs.com.

Lois from Cedar Rapids is still steaming over her treatment despite promises of an extended warranty.

"We received a letter from Toyota that indicated the engine was covered for a period of 8 years for engine sludge. In February of 2006, at 144,000 miles, the engine started making a loud noise. We were told that our car had 'blown a rod' and needed a new engine. We asked about the previous problem but were told that this was not related to the sludge problem and the car was not covered by Toyota."

The Toyota agreement the court is examining contains no finding of fault by Toyota or its dealers and does not prove Toyota or Lexus vehicles are predisposed to develop oil gel.

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