Toyota Motor Corp., plagued for years by claims that engines in some of its most popular vehicles were subject to damaging oil sludge buildup, has settled a class-action lawsuit over the issue.
The agreement, approved Wednesday in a suit filed in 2001 in state court in Louisiana, covers about 3.5 million 1997-2002 model year Toyota and Lexus vehicles.
It calls for Toyota to reimburse owners for the cost of repairs and incidental expenses such as replacement rental vehicles incurred for a period of as long as eight years after the vehicle was originally leased or bought.
After that, any sludge problems would be considered part of the normal aging process, said Mike Michels, a spokesman for the Japanese automaker's Torrance-based U.S. sales arm.
Owners of 1997 and early 1998 model year cars that had oil sludge repairs but were purchased more than eight years ago have until March 31 to initiate a claim by calling Toyota's oil sludge suit hot line -- Lexus owners: (800) 225-3987; Toyota owners: (800) 331-4331 -- said Gary Gambel, the New Orleans-based lead attorney for plaintiffs in the case.
Michels said Toyota offered the settlement to avoid further legal costs and because it would cement what the company has been doing voluntarily since 2002. Almost 7.5 million settlement notices have been sent to the original and subsequent owners of the vehicles covered, Gambel said.
Toyota, which has grown largely on a reputation for building reliable vehicles, has seen its recalls involve increasingly large numbers of vehicles in recent years.
In January, the company said it would recall 553,000 Sequoia large sport utility vehicles and Tundra full-size pickups to repair a faulty steering system component. The trucks were built from September 2003 to last November.
Toyota, like other automakers, increasingly designs its vehicles to use common components. That saves money but can significantly increase the number of vehicles involved in a recall based on faulty parts.
The oil sludge problem has not led to a recall. It surfaced in 2001 when owners of 1997 and later Toyota and Lexus vehicles with 3.0-liter V-6 engines or 2.2-liter four-cylinder engines began complaining of damage to internal engine parts because of a buildup of thick oily sludge.
Many owners alleged that the problem stemmed from a poor engine design that constricted oil flow and led to sludge buildup.
But Toyota has consistently contended that the problem was largely a result of either owners' failure to adhere to recommended oil change schedules or of operating the vehicles under severe conditions, such as high humidity and heavy stop-and-go driving.
Still, after receiving more than 3,000 complaints -- and several months after the Louisiana suit was filed -- the automaker said in March 2002 that it would reimburse owners for repairs. Costs could range from a few hundred dollars for an engine flush and oil change to several thousand for an engine replacement.
Spokesman Michels said Toyota would not disclose costs already incurred in its voluntary program.
Vehicles covered are 1997-2002 Camry, Celica, Solara and Avalon passenger cars, Sienna minivans, Highlander SUVs and Lexus RX 300 SUVs and ES 300 sedans.
Other automakers, including Chrysler Group and Volkswagen, also have received complaints of damage from sludge buildup in engines, but only Toyota has been subject to a class-action suit.