According to court records—as reported in a press release from counsels for the plaintiffs—these engines had issues with sludge buildup even when they were maintained as per recommended service intervals and using proper oil requirements. Years ago, the VW and Audi had extended the powertrain warranty on these vehicles, to eight years and unlimited mileage, but the suit alleges that many sludge-related claims were denied.
Although exact terms haven't yet been worked out or announced, under the settlement, Volkswagen and Audi will allegedly cover "100 percent of maintenance costs" due to the issue, provided the owners provide documentation of oil changes; owners without proof will get a 50-percent settlement for related repairs. Vehicle warranty will also be extended to ten years or 120,000 miles specifically for oil sludge issues.
The issues have plagued these two products for many years, and they seem more related to driving style than to maintenance; while many owners report no issues, a quick Google search provides many accounts of low oil pressure and total engine failure at well under 100,000 miles, from owners who claim to have followed the required oil-change intervals.
Transverse-mounted applications of the 1.8T in the Volkswagen New Beetle, Golf, and Jetta—which don't appear to be as sludge-prone—won't be affected by the settlement.
Final terms and a notice of the settlement will be published in USA Today on or before December 29, 2010. We'll bring you an update as soon as the information is out.