Toyota finally reversed it's position regarding the engine sludge, they are calling it "gel" which is a nicer term. In any case it's more widespread than you or I know and it was starting to create a public relations nightmare for the Sales Division of Toyota.
They were still denying the problem existed up to the first week of February, 2002 and here is how I think the decision, to acknowledge the condition, was made.
I don't now if it was coincidence or not but the National Automotive Dealers Association (NADA) had it's convention late in January 02 and at these conventions each manufacture has a meeting with the dealers to discuss what is going on and plans they have for the future. I think that the dealers got really on Toyota's case with the position they were taking and voiced their strong collective opinion. Now the dealers look at this a couple of ways. First it's really hard to sell a current Toyota customer with the problem a new vehicle not being able to assure them that it won't happen again and the reason it happened this time was, according to Toyota, their fault. The dealers were taking these vehicles in trade or getting them from the auction, many of these had the sludge problem and the dealers were stuck with the problem costing them thousands per vehicle. Lastly internet sites, like mine, were getting more support and the news was out of the closet, so to speak, and Toyota Motor Company hates bad press.
I applaud the fact that Toyota Motor Company reversed their position. I wished that they would have been more forthcoming on their Internet site directing visitors to their explanation of the situation. This is still developing and when I have more information regarding what the guidelines are for the Special Policy Adjustment I will list them here. As it stands now the only models that are affected are Camry, Avalon, Sienna, Solara, Highlanders, Celica, and Lexus models ES300 and RX 300 from 1997 to 2001.