One of the most disappointing aspects of last week's sales results from General Motors was the underperformance of the much-hyped new truck offerings from the company. While the industry-leading Ford F-Series saw sales increase about 10 percent to around 60,500 vehicles for the month, GM's combined sales for its competing Chevy Silverado and GMC Sierra fell approximately 8 percent to about 46,000 units.
General Motors reported unimpressive sales results for the month of September as sales fell 11%. Core division, Chevrolet, performed the worst with sales down almost 15% year over year. Within that division, sales for the much-hyped Chevy Volt could not even be propped up with its recent $5,000 price cut as results declined to a measly 1,766 units (less than one per dealership) in September. That is a decline of over 38% year over year and just over half of what sold in the previous month.
We now have had some time to digest the groundbreaking news from General Motors that it is working on a "Tesla-Killer" electric car that will get 200 miles on a charge and cost about $30,000. The most obvious takeaway is that the news is more unfounded green hype from GM, something that they have been guilty of in the past when they over-promised on the Chevy Volt. The best indicator of how serious a challenge to Tesla the new report really is would be found in Tesla's share price, which has gone from about $165 a share at the time of the news to the current price at around $185. While that barometer would give the indication that GM is once again exaggerating the potential for its latest green miracle car, let's assume that the technology to develop a car that goes 200 miles on an electric charge at a price of $30,000 really is not too far off.
After the Department of Energy announced this week it had given up on not-bankrupt-but-should-be Fisker Automotive, and will auction off its loan for a pittance, you’d think (and hope) Congress would have had enough of this kind of thing. Senator John Thune certainly has.
“The Obama administration has gotten into the business of picking winners and losers at a significant cost to taxpayers,” said the South Dakota Republican yesterday. “I’m calling for the Senate to consider my amendment to eliminate the wasteful ATVM loan program and for my colleagues to join me in protecting taxpayer dollars from any future risky green energy investments.”
Then in mid-August Ecotality informed the Securities and Exchange Commission it was in deep financial trouble, with bankruptcy a possibility. A filing showed that the company was unable to obtain additional financing and the DOE had ceased payments to it for the EV Project until the agency could investigate further. DOE also warned Ecotality to not incur any new costs or obligations under the EV Project.
The internet has been abuzz with stories about General Motors competing with Tesla by offering a vehicle that will get 200 miles on an electric charge and cost only $30,000. One headline even declared that GM might be the winner of the competition with the title reading, "GM Takes on Tesla- and Just Might Win." The only problem is that the car being hyped does not even exist. Nor may it ever.
It looks like General Motors is attempting to make up for the money it loses on every Chevy Volt in volume as August sales, spurred by recent price cuts, reached an all-time high of 3,351. The fact that the car has been on the market for about three years and initial much-hyped proclamations from GM would have put sales at 20,000 per month by now goes unrecognized by those that think 3,351 vehicles is a lot of cars to sell in a month. To put the sales in perspective, it took Toyota about 2 ½ days to sell that many Camrys with August sales coming in at 44,731. Fortunately for taxpayers, Volt sales are nowhere near those figures. The 3,351 Volt sales came at the expense of over $25 million dollars of federal subsidies.
The auto industry, including Detroit manufacturers, reported strong sales numbers for the month of August. Sales for the industry rang in at pre-recession levels hitting over 16 million units on an annualized basis. While General Motors got its fair share of the wealth, one unusual tactic to drive sales stands out. That is the use of "stair-step" incentives which are paid to dealerships in the month following the reported sales.
For years the Obama Administration maintained that they had no significant involvement in the day to day operations at General Motors as the company was guided through a taxpayer-funded bankruptcy process. A report from the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) now sheds light on the process and confirms that the Administration did, in fact, drive decisions at GM. One such decision saw GM provide taxpayer funds to "top-off" pensions for politically-favored UAW retirees at Delphi while non-union retirees lost the majority of their benefits. Treasury officials previously denied any involvement in the actions.