CHEVY VOLT:: The Money Pit – IER

By at April 18, 2012 | 11:30 am | Print

CHEVY VOLT:: The Money Pit – IER

Supporters of the Chevy Volt were elated at March’s record sales figures, thinking that the future had finally arrived. Yet in absolute terms, the Volt’s best month ever is hardly impressive. More important, these drab sales are propped up by an extraordinary amount of preferential tax treatment and direct subsidies, ranging anywhere from $50,000 to $250,000 per vehicle sold. The Chevy Volt is a prime example of the folly of government’s picking of winners and losers in the marketplace.

March Sales: It’s Not Hard to Beat a Horrible Track Record

This matter-of-fact Forbes commentary on the record-setting March sales gives an idea of just how abysmal the Volt has been thus far:

[S]ales results for March…showed Volt sales zooming to 2,289 units for the month, a full 277 percent ahead of a year earlier and about the same percentage ahead of poor sales in January of this year.

That result gave Volt by far its best sales month ever and could inject some life back into a proposition that lately has been much more about politics than about the product.

Yet sources at some Chevy retailers didn’t report any kind of broad-based surge in retail sales had developed in March over February. It’s possible Volt’s quick rise wasn’t much noticed by many dealers; the addition of about 1,000 sales of Volt in a month’s time, spread across about 3,000 Chevy dealers in the United States, would mean the sale of only an extra one-third of a unit per dealership, on average, in March compared with February. Meanwhile, a source with knowledge about federal-government fleet orders didn’t believe the Obama administration had placed any big order for Volts lately.

In any event, there appeared to be some hope that strong Volt sales in March comprised more than just a one-month blip. Early last month, GM announced February sales results for Volt that had recovered to 1,023 units from only about 600 units in January — a month that had been dominated by continued publicity over Volt’s fire-crash issue. But then last month, GM also announced the suspension of Volt production and further soured the waters by blaming media “exaggeration” of the fire risk for Volt’s slump. [Bold added.]

When dealing with such a low baseline, it’s not too hard to get a 277 percent “surge” from the previous year’s figures. To keep things in perspective: By far the best single month saw 2,289 Volts sold. According to GM’s U.S. sales figures [.pdf], its best-selling Chevys in March were as follows:  Silverado/C-K Pickup at 36,491 units, Malibu at 23,887 units, Cruze at 21,607, and the Equinox at 20,064 units. There were some models (such as the Avalanche and Corvette) that sold fewer units than the Volt, but overall to have a record-breaking month of 2,289 units sold is hardly a good sign.

Record-Breaking Government Support

The poor sales record for the Volt is all the more disturbing in light of the tremendous (perhaps record-breaking) support the electric vehicle has received from both federal and state governments. Most obvious, the federal government currently gives a $7,500 tax credit to Volt buyers—who come from households earning $170,000 on average—a generous incentive that President Obama has recently suggested be bumped up to an even $10 grand.

Yet there are very generous state-level benefits as well, as this Forbes piece explains:

Demand in March was beginning to build among dealers and consumers in California for a lower-emissions version of Volt that GM just started manufacturing, so that it could be eligible for single-occupancy access in carpool lanes and up to $1,500 in state rebates.

Other states also have been adding incentives for Volt purchase. Colorado, for example, recently announced that Volt customers would become eligible for a state tax credit of up to $6,000 — on top of the federal tax credit of $7,500. That could cut the effective sticker price of a Volt sold in the Rocky Mountain State by up to $13,500, or down to the mid-$25,000s, from $41,000. At that price, Volt’s features and contenting level would compare favorably with many internal-combustion models. [Bold added.]

via Institute for Energy Research | Chevy Volt: The Money Pit.