Toyota 'Quietly' Settles Class-Action Lawsuit Re Engine Oil Sludge; 3+ Million @ Risk

[Perian]

Source: Automotive News special email alert
Link: www.oilgelsettlement.com

Mark Rechtin - Automotive News - January 8, 2007 -

LOS ANGELES -- Toyota Motor Sales U.S.A. Inc. has quietly settled a class-action lawsuit that covers about 3.5 million Toyota and Lexus vehicles that may have been damaged by engine oil sludge.

Details of the settlement, which allows for third-party mediation of sludge claims rejected by Toyota, have been mailed to 7.5 million current and previous owners.

Critics contend Toyota has told customers and dealers too little about sludge issues. They say some customers took vehicles with dead engines to dealers who had little or no knowledge of the problem and often assumed it was the owners' fault.

Unhappy customers had no remedy other than hiring a lawyer to go after Toyota.

Under the agreement, owners whose claims have been denied by Toyota may submit them to a third-party mediator at no cost for binding arbitration.

"This settlement breathes life into claims that have been dead for years," said Gary Gambel, a lawyer for plaintiffs who sued Toyota. "This is not a settlement that gives a few dollars to everyone. The relief is exactly tied to the problems and damages that someone might have."

About 3.3 million Toyota vehicles are susceptible to oil sludge, which can cause thousands of dollars in damage and require replacement of the engine.

Sludge is gelled oil that fails to lubricate engine parts. It can lead to damage, often requiring a new engine at a cost that can exceed $10,000. Complaints about sludged engines have plagued several carmakers, but Toyota's troubles have been especially controversial in light of its reputation for vehicle quality.

The issue highlights a possible chink in the company's armor. Executives fear Toyota is growing too fast for its engineering resources. That could lead to quality snags and a tarnished reputation.

When a customer takes a sludge-caked engine to a dealership, there is usually a "clean-out" procedure. The head is pulled and a service technician tries try to steam out the sludge. If that doesn't work, the engine must be replaced.

Sludge can result from poor engine design; overly tight tolerances between moving parts; improper cooling; and poor maintenance by consumers.

Toyota insists the problem arises mainly when owners fail to change their oil frequently enough.

The agreement does not find Toyota at fault.

Damages that can be recovered include loss in value of the vehicle and incidental costs, such as rental cars. Past lawyers' fees, mental anguish and bodily injuries are not covered.

A Toyota spokesman said the agreement is not a defeat for the automaker.

"The settlement validates the customer support program we implemented four years ago," Xavier Dominicis said.

"The terms of the program remain unchanged. There always was a way for customers to appeal our decision."

Plaintiff lawyers disagree. They say Toyota failed to communicate the extent of the problem to its dealers and customers. Toyota's appeal process also meant hiring a lawyer, which many consumers could not afford. It costs nothing to file an appeal with Ates.

"The consumer only needs to show reasonable maintenance in terms of oil changes," Gambel said. "You don't need to prove where the sludge came from, or explain your driving habits. If you have oil sludge, Toyota pays" the consumer.

[Perian]

People who live in glass houses...

As a former (2001) Saab owner, I can't comment on this story.

However, GM did increase the warranty, and made Saab's sludge problem public.

Toyota if I recall (no pun intended) at first stated the consumer was to blame.


Note:
My 2005 Saab carries a label under the hood advising the use of synthetic motor oil only.

[T-Type]

Fortunately for us we have Perian so it won't be that quiet.

Nice find Perian!

[Old Dood]

Toyota should pay people for their hassles and damage caused. It is not like they do not have the money. Not paying and not admitting to this will hurt a company more then the money they think they are saving.

[boblutzfan]

This is a major quality issue. The powertrain is the most expensive part of a car and a part we expect to run without incident for well over 100,000 miles. Hopefully someone in the media will latch onto this and run with it. For now we need to email this article and news to everyone we know.

This is a serious quality issue that goes well beyond loose trim (which C&D slammed the 2007 Camry for in their latest comparison test) or faulty tailgate straps.

The fact that they wouldn't acknowledge the problem really casts the company in a negative light.

[JBsZ06]

So much for the halo bull**************** that toyota fans carry around..

Toyotas blow. They just keep as much as possible quiet.

JMO

[CrunkedRL]

For this story we need a whistle blower in the media spotlight who is noted for being a loudmouth and blowing things out of proportion. Where is Rosie O'Donnell when you need her?

[rsbaker]

Why don't I see this on the evening news? If this had been GM this story would have lead and had fallow-up story using this as only the latest example of why GM is faltering in the market place. So when Toyota blames its customers for it's own faulty designs and then there is a conspiracy to cover it up and not cover damage with warranties? I can only hope that someone in the automotive or main stream press will shine some light on this

[guitarlix]

Who here DIDN'T know about the sludge problem? This thing was dragged through the news for a long time.

http://www.oilgelsettlement.com/

[FStephenMasek]

Originally Posted by guitarlix

Who here DIDN'T know about the sludge problem?

People on this forum are generally far better informed than typical new car buyers. Most of the typical new car buyers probably do not know anything about it.

[guitarlix]

This thing was splattered all over the news. How could you have avoided it?

[uboys]

Toyota was probably right. I can't imagine the Consumer Reports-reading hordes, who lease new Camrys like clockwork every three years without even thinking about it would ever even know anything about cars or car maintenance.
So they likely didn't change the oil.

(Just wanted to get my slur in there).

[goochman]

If this was GM you'd see Dateline stuff a firecrackers into the sparkplug holes to show how these can blow up and cause fires

[VCDJ]

You can not here this on any news. If this was GM. This would be breaking news. Why does media want American auto industry to fail, can somebody explain that? Will this be in consumers report??? Probably not, if it was GM it would.

[macphisto]

This sludge problem has been ongoing for years. My brother has owned two Camrys and was warned by Toyota by mail that any oil sludge problems were not its fault and that he'd best always get full synthetic oil changes to avoid it.

All carmakers design products that end up with flaws. Even in testing it is difficult to look at everything that could possibly happen. My biggest problem with Toyota is that when a problem arises they try to sweep it under the rug or blame it on their customer.

One positive thing about the Big Three - there past issues mean that if there's a problem you, as a consumer, are far more likely to hear about it than you are for Toyota, Honda, or Nissan. Toyota and Honda are the worst when it comes to hiding problems because their success is built on the impression of quality.

My brother owns a Toyota and my dad owns a Honda. Both had side airbag recalls. Neither dealership volunteered this information or fixed the problem until I let both know of the problem. Both were essentially told that Honda and Toyota didn't want to money spent on fixing it unless the customer asked. I've never had that happen for GM issues, even for minor things. I take a car into the GM shop and any problem pops up immediately and they explain it to me.