Oil smell coming from under the hood could be normal (spills/fingerprints burning off, should go away quickly) but oil stink out the tailpipe? Not a good sign. It could be from several things:
1: liquid oil pooled in the exhaust system from your prior engine. If this was the source, it'll burn off after a couple hundred miles and the oil level on the
dipstick won't change. The dealer should have checked for this when the engine bay was empty.
2: bad
valve stem seals on the new engine. This will burn oil forever, continually lowering the
dipstick reading, until the defective valve seal is repaired/replaced.
3: incorrect head gasket installation. Same as #2.
4: Positive Crankcase Ventilation (PCV) system not hooked up properly or not functioning. This allows combustion blow-by (i.e. a bit of the burning air+fuel mix squeezes past the piston rings and ends up in the oil pan) to pressurize the oil pan area, shoving oil around. Normally this manifests as oil leaks from gaskets and seals that weren't designed for pressures. Sometimes though it shoves oil into the intake manifold where it ends up in the cylinders and gets burned. With the engine warmed up and idling, slowly remove the
dipstick. If oil tries to splash out (stand out of the line of fire!) or if you feel air pressure coming from the
dipstick area, I'd suspect the PCV system is screwed up... or see the next item... The
dipstick oil level will continually drop.
5: screwed up piston rings that aren't sealing properly. This lets oil into the combustion chambers and the engine continually burns oil. It also lets too much blow-by into the oil pan area - more than a healthy PCV system can handle. The
dipstick oil level will continually drop, probably quickly too.
If you can see the oil level drop in the next 100 to 200 miles, I'd have the car at the dealer. Find the real problem. And, if liquid oil has gotten into the exhaust (from the original engine or from a big screw-up on this engine) make them replace the catalytic converters too. They get gummed up quickly with oil flowing through them. (oil burned in the combustion chambers isn't very bad... but raw oil or unburned oil fumes are bad.) It's hard to check cat converters unless they're physically removed from the vehicle and examined by eye, often with one of those snake-like inspection cameras. Normally they have a fine window-screen looking mesh to their insides. Partially blocked/damaged cat converters lead to higher emissions, lower performance and lower MPG (due to the exhaust being more restricted than normal), etc. They're also darned expensive when they do go bad so the last thing you want is for a dealer to leave "working but damaged" cats on the vehicle only to have them fully wear out just after the emissions warranty expires.
mike c.
