Description: Oil sludge 2004 model year Volkswagen Passat. We are writing to inform you that Volkswagen is providing a warranty extension covering certain "oil sludge" related repairs on 1998 2004 model year Volkswagen Passat equipped with 1.8L Turbo engines. Our records show that you are the owner of one of these vehicles. - What is the Issue? Some Volkswagen owners have reported engine component problems resulting from a condition known as "oil sludge." Engine oil sludge occurs when old, dirty engine oil thickens and cannot continue to provide adequate engine lubrication.