The issue could have ended calmly on March 1, 2001 when an arbitration panel unanimously concurred that the Toyota Motor Corp. was liable for the damage of Jeff Meckstroth's two-year-old Lexus RX300 sport utility engine. However, the dispute worsened when two representatives of the automaker packed up their papers and referred casually to other identical cases they were handling.
"Then we had our suspicions up that this isn't an unusual case, that Lexus knows about the problem, and has formed a response - just deny, deny, deny," said Meckstroth, a 47-year-old New Orleans stockbroker. "We decided to sue." His case sprouted into a class suit to include prior and current owners of about four million Toyota and Lexus vehicles complaining about engine sludge.
Engine sludge is caused by the accumulation of gelling or solidifying oil. It usually occurs at temperatures lower than 100 degrees Celsius. Sludge is a cause of major engine problems. It deprives the engine of the required lubrication. In addition, sludge could necessitate an opportune engine replacement.
Toyota has agreed to settle the case last fall however it maintains that its engines were not defective. The automaker said the settlement terms mirror a program to reimburse customers for sludge-related engine damage or repairs that it put in place in 2002. The said settlement is expected to be approved by a Louisiana state court.
With a single engine replacement costing approximately $10,000, the gross amount could run into the billions. However, the tainted reputation of the automaker is worth more than that. Toyota is not the only automaker that has been confronted by engine sludge problems. But the high-profile case is the latest in a series of recalls. This situation is suggestive that Toyota?s controls are not foolproof.
"It would be accurate to say that there have been enough issues with Toyota in the past couple of years that they don't have the spotless image they had a couple of years ago," said Karl Brauer, the editor in chief of , an automotive research Web site. But he adds that problems at Toyota attract a disproportionate amount of attention because of the automaker's sterling reputation for quality. "Most companies wouldn't get noticed for these problems."
DaimlerChrysler AG's Chrysler Group and Volkswagen AG are among the automakers that have confronted complaints about sludge in their vehicles. "There are reasons to believe that the engine design could be contributing to it, but there are also reasons to think that lack of maintenance or proper customer care is contributing," Brauer said. "Everything I've read indicates something kind of in between."
Gary Gambel, an attorney at Murphy, Rogers, Sloss & Gambel in New Orleans, argued that Toyota's engines had a defect giving them a propensity to develop sludge. "The terms of the settlement and the settlement itself have no finding of defect in the product," Toyota spokesman Xavier Dominicis said however. "They're not saying these engines are predisposed to sludge."
Toyota remains among the quality leaders in vehicle manufacture. But if complaints about auto parts not only the engine but EBC brake pads, brakes, suspension and more, keep coming, the reputation linking to quality will be compromised.
"The sludge issue was a significant blow," said Art Spinella, president of CNW Marketing Research Inc. in Bandon, Ore. "Toyota's in the position that GM was in back in the 1970s. A lot of people were buying GM products in the '70s because they were GM products, but they had fractures at the edges. It took 15 years before GM started to suffer from that long-term negative word-of-mouth." At Toyota, he said, "It's going to hurt them if they don't turn it around."