Is Toyota’s make-good offer fair?

When Samuel Silverman took his green 2001 Toyota Prius to a West Los Angeles dealership Aug. 23, he wasn’t sure what had caused the master warning light for the hybrid system to turn on.

While the hybrid car was at the dealership that night, a fire started in the rear compartment near the high-voltage battery and burned through the back seat. The next morning, mechanics discovered the damage, which his insurance company declared totaled.

Now, more than three months later, Toyota engineers are not sure what caused the fire, although they are still investigating it, according to officials at the company’s U.S. headquarters in Torrance.

Toyota has agreed to cover the totaled Prius, although the company has offered a lot less than Silverman claims it would cost to replace. Neither party is disputing the circumstances surrounding the fire, only the reimbursement.

Silverman received the used car from his father, Alan, a retired Voice of America broadcaster who is a big fan of the Prius. That Prius was one of three owned by the family. “I have no lack of confidence in the hybrid system, but I do have concerns about how the service was handled,” Alan Silverman said.

The Prius has become an icon of the environmental movement and appreciated by a broad spectrum of consumers. It is highly favored in the entertainment industry and admired by many aerospace engineers for its technology. The auto has performed reliably, despite its many advanced systems.

That’s not to say it’s perfect, however, because the car’s high-voltage battery has had a few glitches. Toyota adopted a special service campaign -- a type of extended warranty that critics sometimes term a silent recall. Under the campaign, known at Toyota as the 40G program, owners of Prius models from 2001 through 2003 were warned that the high-voltage battery could leak electrolyte, the liquid that helps create electricity.

The leaks could occur around the positive battery posts; in high humidity, that could cause the high-voltage battery computer to detect a drop in electrical resistance. If that occurred, the computer would set off the master warning light for the hybrid system.

Toyota had received reports of seven cases of leaking batteries for model years 2001 through 2003, according to company spokesman John Hanson. Beginning in August 2004, it sent letters notifying 48,000 customers about the potential problem. Although Toyota could not say whether more reports of leaks have been filed, it has not heard of any accidents or other fires.

Samuel Silverman’s problems began Aug. 20, when he took the car to the dealership for a leak in the air-conditioning system. He got the car back on the afternoon of Aug. 23 but never made it home. After noticing that the dashboard had been reinstalled improperly and that the master warning light was on, he returned the car to the service department.

Toyota engineers are not sure whether the fire in Silverman’s car is related to potential leaking electrolyte, Hanson said. The vehicle had not undergone the 40G service, but dealership paperwork indicates that technicians planned to perform that service, plus troubleshoot the warning light and fix the dashboard after Silverman returned the car to the service department.

Silverman’s vehicle is the older Prius, a smaller platform with a less powerful battery that Toyota offered before 2004. Not long after the Prius was introduced, Toyota began receiving complaints that the car’s battery wasn’t holding a charge. In at least one case in 2002, Toyota agreed to repurchase a Prius from its owner.

Despite such isolated cases, the Prius has a solid reputation. However, Toyota’s 40G campaign is not widely known. Alldata, an automotive repair publishing service, does not have a record for the 40G campaign in its database, used by many independent mechanics to alert them about service issues.

A leak in the high-voltage battery is potentially serious. Electrolyte’s main component is potassium hydroxide, a potent base rated as a “high” health hazard by independent laboratories. One measure of the care Toyota tries to exercise over the Prius is the company’s Emergency Response Guide, which has 23 pages of information distributed to emergency service personnel. Among other issues, a vehicle fire can emit toxic gases.

None of that, however, is at the heart of Silverman’s dispute with Toyota. Rather, his current concerns deal mostly with the fair market value of the vehicle.

As readers of Your Wheels may recall, disputes over the value of totaled vehicles are common. Insurers and others often use services that assign a lower value to a vehicle than the appraisal companies in the used-car industry.

Under California law, an insurer must pay either the fair market value of a car, backed up by at least two comparable vehicles for sale locally, or provide a replacement vehicle.

“We asked for their comps, but we never got them,” Silverman said.

Silverman said he has comps from local used-car lots and private sellers that range from $15,000 to $17,000. The $11,500 that Toyota is offering would barely cover the $8,000 loan that exists on the vehicle, he said. A check on www.cars.com seems to confirm that 2001 Priuses are commanding healthy prices.

Apart from the money dispute, Silverman says he is disappointed that the issue is being dealt with by the company’s legal department, rather than its technical groups. Given his dedication to the product, he would like to know what happened, he said.

Ralph Vartabedian can be reached at ralph.vartabedian@latimes.com.