Good morning,
Yes this is a common failure of the 12V motor. The motor has run hot and as a result the commutator started melting. Underneath the 3 copper plates that form the commutator is plastic so that has been deformed. Also, you will notice that the carbon brushes have been sheared off. I would also check the nylon gears on the axles to see if these have been damaged, which happens often.
To repair this, it will require a new commutator and brushes. I've been told they can be found at certain train hobby shops, but I've not been able to track them down.
I don't know why these motors run so hot that the plastic melts, anyone got ideas on that?