TOYOTA MOTOR SALES USA Agreement reached in class-action suit



Oil sludge was damaging the engines of Camrys and other Toyota models.
DETROIT FREE PRESS
DETROIT -- Jeff Meckstroth, a New Orleans stockbroker, bought a Lexus RX300 in late 1998 because of the luxury brand's reputation for quality.
Two years later, Meckstroth's opinion of Lexus, and its owner Toyota Motor Corp., changed when the engine in his car came to a clunking halt and the automaker blamed him for the problem.
"What was really disconcerting is that when we went into the Lexus dealership, they said it wasn't covered under warranty due to lack of owner maintenance," Meckstroth said.
Meckstroth's long-running legal battle with Toyota, which grew into a class action over oil sludge damage, is expected to come to an end in early February.
Toyota Motor Sales USA, the U.S. sales arm of Japan-based Toyota, and lawyers representing car owners have reached an agreement that would cover engine repairs and incidental damages caused by oil sludge for up to eight years after the purchase of certain vehicles.
The vehicles include several Lexus and Toyota models, including the Camry, sold in the late 1990s and early 2000s. The Camry became the best-selling car in the United States in 1997, based largely on its quality pedigree. It has held the top spot every year since, except for 2001, when it was second to the Honda Accord.
What's behind this
The case arose from customer complaints that oil sludge was building up in the engine and causing damage that required part or all of the engine to be replaced.
The number of customer problems is not determined, but the pool of covered vehicles is estimated to be between 3 million and 4 million, based on sales figures. Notices have been sent to about 7.5 million original and secondary owners of the vehicles, according to plaintiff s' lawyers.
The oil sludge issue is not new for Toyota. The last model year included in the settlement is 2002.
But the case is coming to a close at a time when Toyota sales are increasing at double-digit rates in the United States. Many analysts are predicting Toyota will pass General Motors Corp. this year as the world's largest maker of cars and trucks.
Maintaining its reputation for quality is a top concern, said Toyota spokesman Xavier Dominicis. Toyota already has been working with customers to remedy the issue, he said.
A customer support program, which closely mirrors the settlement, was put in place in 2002 to deal with oil sludge problems. Proper maintenance, such as regular oil changes, should prevent oil sludge buildup, but Toyota wants to address any problems brought to it by customers, Dominicis said.
Sludge problems
"Our biggest concern is customer satisfaction," he said. "That's why we're so gratified that this settlement validates the program we put in place four years ago." Meckstroth, who started the case, said he changed the oil in his Lexus based on company guidelines.
Toyota, without admitting a defect to the engines, acknowledges that some owners who changed their oil regularly experienced sludge problems.
The class-action settlement should make it easier for customers to receive resolve their problems, said Gary Gambel, a New Orleans lawyer heading the case for plaintiffs.
Under the settlement, customers can bring issues directly to Toyota. If they're not satisfied with Toyota's response, the customer can turn to a court-appointed third-party evaluator, who will decide what damages should be paid.

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