The Chevy Volt is too Expensive unless you want to Drive in the Carpool Lane Alone

Posted by PITHOCRATES - September 9th, 2012

Week in Review

The government rarely runs anything well.  Because few politicians have any business experience.  Which explains why the more they intervene into the private sector economy the more the economy suffers.  Case in point GM.  GM was losing money because they couldn’t sell cars at a high enough price to pay their bills.  Especially their retiree pension and health care costs.  Instead of allowing GM to go through the bankruptcy process to fix their problems so they could sell cars at prices that would pay their bills the government bailed out the UAW.  And did not fix their underlying problem.  What caused all of their problems in the first place.  High labor and retiree costs.  So it’s no surprise that GM did not emerge leaner and meaner from bankruptcy.  Like the airlines typically do.  Instead they left the problems in place.  And told GM to build the Chevy Volt (see The Chevy Volt: Dead or alive? by Brooke Crothers posted 9/3/2012 on CNET News).

Depending on who you believe, the Volt is either alive and kickin’ or in its death throes.

The most recent news about GM’s plug-in hybrid gives fodder to both sides. On the upside, GM said on Wednesday that it already has sold more than 2,500 Volts this month. That would be a monthly record, bringing the global total this year to about 13,000, according to reports.

But critics quickly jumped on another piece of news: GM’s suspension of Volt production for four weeks.

Dying or not this is not good news for the Volt.  Very few are buying these cars.  And those who do are not buying them because they are great cars.  They’re buying them to make a statement.  Or for some other reason.  And that is the problem for the Volt.  When a vehicle is selling well you hear the rank and file complaining about all of the overtime they have to work.  To keep up with demand.  While demanding their factories add another shift.  But when you’re only selling 13,000 a year (just over 1,000 a month) you can shut down for four weeks.  And no one will even notice.

But the completely electric Nissan Leaf has not fared well either. It has a goal of 20,000 units this year, which the Detroit News says is increasingly unlikely.

Another problem GM faces is competition. It’s no longer the only plug-in hybrid on the block. Ford has its C-Max Energi plug-in hybrid ($32,950) and Toyota is now selling a Prius plug-in hybrid ($32,000)…

GM says one in three Volts are now sold in California. And there are reasons for an uptick in Golden State sales. The Volt earlier this year finally qualified for the California provision that allows environmentally friendly cars to use restricted carpool lanes whether they’re carrying passengers or not.

And the Chevy Volt sells for $40,000.  People just aren’t demanding these cars.  Because they’re expensive, small cars.  And the people that are buying the most Volts are in California.  Just so they can drive in the carpool lanes.  Where commuters will pay almost any price to avoid that awful Californian gridlock.  Especially if you don’t have to drag along another body with you.

The federal government poured a lot of money into the Chevy Volt when they bailed out the UAW pension fund (aka the auto bailout).  This was the car of the future.  Because President Obama said so.  And proclaimed the new GM would sell a million Volts a year.  And GM would use the proceeds from these sales to repay the taxpayers.  Not only have they grossly missed the president’s sales target.  The government interference in the company (by making them build a car that no one demanded) has caused the stock price to fall.  While the government still owns a substantial amount of shares.  Pushing any repayment of the taxpayers’ money further out in the future.  If there is any repayment at all.

It just may not be time for the plug-in hybrid.  Based on these sales numbers.  So it probably wasn’t wise to make it such a big part of GM’s turnaround plan.  Or to pour so much taxpayer money into it.  Worse, GM is not positioned any better to compete in the market place.  Which is why their plug-in hybrid is the most costly one in the market place.  And will be for the foreseeable future.  Until they have a true bankruptcy reorganization.

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