Car-Buying Public Still Shuns Chevy Volt: GM Cannot Give It Away
There has been plenty of evidence in the past that the car buying public does not want anything to do with General Motors Co.'s (NYSE: GM) Chevy Volt. Buyers have purchased other electric cars. But the electric car sector's greatest problem is that these vehicles live in the shadow of hybrids, which apparently get good enough gas mileage to satisfy most buyers. The huge success of the Toyota Motor Corp. (NYSE: TM) Prius and its rivals is proof of that. So, the Volt has an unenviable position in an unenviable business.
GM announced ridiculous deals to draw potential Volt buyers. It will try to clear out its 2012 inventory, which should not exist at all, with cash incentives has high as $5,000. At the Chevy website, the 2013 Volt is listed with an incentive of $4,000. And consumers can lease the Volt for as little as $269 a month.
GM is practically giving away the Volt, and it cannot possibly be making money on the car, as a number of experts have pointed out.
The Volt has had problems with its battery in the past, which brought Chevy waves of bad publicity and probably damaged sales. GM likely has kept the Volt on the market because it does not want to abandon the flagship car of what management describes as the future of the industry. However, if the Volt is the future of the largest car manufacturer in the world, the years ahead will be difficult.
The Detroit Free Press reported on the GM decision to slash Volt prices:
Volt sales declined 4.3% in May to 1,607 while industry sales increased 8.2%. Through the first five months of this year, Volt trails both the much more expensive Tesla Model S and the smaller, less-expensive Nissan Leaf.
At one time, GM expected to be building between 60,000 and 100,000 Volts annually, but with sales this year through May of 7,157, that goal has been reassessed.
"We have inventory we want to move to get ready for the 2014 model year, and there is a lot of competition in the marketplace," GM spokeswoman Michelle Malcho said.
Chevrolet dealers have about 140 days' supply of Volts, about twice the preferred industry average.
GM already loses money on the Volt and will lose even more as it raises incentives. It costs GM as much as $75,000 to produce a Volt, according to some analysts.
Filed under: 24/7 Wall St. Wire, Autos, Retail Tagged: featured, GM, TM