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