Posted on 09/13/2012 10:28:48 AM PDT by jazusamo
A Reuters' article earlier this week created quite a buzz when it suggested that General Motors was losing $49,000 on every Chevy Volt sold. While many continue to debate just how much money GM loses on the politically-motivated car, a more important story on the Volt was reported by Automotive.com last week which explained the increase in August sales numbers for the vehicle. The piece exposes how GM (along with taxpayers) is heavily subsidizing leases and even gets an embarrassing admission from GM on the struggling Volt that, "The whole idea is we're creating a market." And this blockbuster, "There is no plug-in market."
The quotes came from GM spokesman, Jim Cain, whom I spoke with earlier this week. Mr. Cain told me that a full two-thirds of August sales were attributed to leases. This is about three times the lease rate for the overall industry. Some customers are able to drive a Volt for two years for under $4,000 out of pocket thanks to tax subsidies and GM incentives. Think about this, taxpayers pay GM dealerships $7,500 as the customer pays $4,000 so that a Chevy Volt can be put on the road for two years. Is this really taxpayer money well-spent?
I am still not able to get a clear answer on just why GM continues to spend millions of dollars marketing a vehicle that loses money for them. Rising CAFE standards might explain why auto manufacturers have to build high-efficiency, high-cost cars that consumers do not want, but why would GM lose more money than it has to by spending a disproportionate amount of funds advertising the vehicle? Ford and Mitsubishi offer plug-in vehicles which sell in even more dismal numbers than the Volt, but at least they are not throwing good money after bad by hyping the vehicles and spending tens of millions of dollars on ads. Since the strategy by GM does nothing to help shareholders and the bottom line, I must assume the continued Volt farce is motivated by political reasons. The Obama-appointed management at GM seems to have a costly green-minded agenda as the President campaigns upon the perceived success of the company and Treasury refuses to sell the government's ownership stake in the automaker.
While the manipulated August Volt sales of about 2,800 were trumpeted as a great accomplishment, the sales pace is still far below GM's goals. To put it in perspective, the car sells about one-tenth of what the conventionally powered Chevy Cruze does. Add to that fact that the sales are driven by taxpayer and shareholder funded incentives. Top it of with the realization that the car loses somewhere between thousands and tens of thousands of dollars on each vehicle sold. Only politically-minded spinmeisters during an election season would present those facts as an example of green energy success. While it seems obvious that the attempted deception will continue at the expense of taxpayers, it remains to be seen if Mainstream Media and auto industry analysts will continue to ignore or even promote the folly while politicians remain quiet spectators of the P.T. Barnumesque Chevy Volt circus.
Mark Modica is an NLPC Associate Fellow.
That has been one of my complaints about this whole fiasco --- there is no infrastructure to support these things. I think that the Sears in our local mall has a couple of charging stations outside of it's store. However, that is the only charging station I have ever seen, anywhere.
A lot of decent cars were taken off the market because of that.
My buddy drives one and he is probably to the right of Atilla the Hun.His reasoning is he needed a new car for short mileage trips around town and when he saw the amount of tax credits available he jumped at the lease.
What is going to happen to these Dolts, when they come off lease?
I suspect the dealers and their financing buddies are betting on the come that these vehicles will be worth more than what they have invested.
From the looks of sales of the Volt and demand in the future it looks to me they're taking a very big gamble.
With a crony/in-law/relative of Julian Fidel Castro in charge of them, no doubt...
Before you laugh too hard, think about this. Part of that $7500 is money out of your pocket that you’ll never see again. I could give two large craps about the environment, but I’m thinking of getting in on one of these crazy lease deals. Its only fair, I already paid taxes toward one. Granted, I’m in a unique situation where it could actually be financially beneficial to me. I don’t pay for electricity in my garage and I hardly drive since I work from home.
If I got one, and you laughed at me, I’d laugh right back. I won’t vote for socialism, but I’ll be dang sure to try to get my money back. Thanks for subsidizing my travel ;)
No infrastructure? Do you have outlet in your garage? Do you see gas stations every 2 miles?
There’s plenty wrong with the Volt and the GM bailout, but plug-in hybrids are a great direction towards energy independence. The morons currently running our country are unfortunately trying to shove the things down our throats instead of letting the market naturally and efficiently develop and refine the technology.
How great would it be to have private companies buy into parking lots setting up “charging meters”. Plug-in owners would glady pay a small premium on top of the local per-kwh charge for electricity.
The technology has a great capability to create new markets for private sector entrepreneurs while sending less oil money overseas.
Yes, there is no plug-in market. Chevy is creating that market with the Volt. Toyota did the same thing with the Prius back in the day. They sold Pri at a loss so that they could get them on the road and create a market for them. Look at it today, millions have been sold.
You say that consumers don’t want high efficiency vehicles? Bull. If the car is fast, reliable, and handles well then efficiency is a nice bonus. It is the cost for the batteries that keep the price for the Volt high. Once batteries get cheaper the Volt will take off. More Volts are sold each month that the previous month.
Trash those stupid CAFE standards? Fine, then watch gas reach $7 a gallon and complain about gas prices. We are past peak oil production, we are headed downward and we have to (or get to) adapt to that.
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