GM Confirms Slow Chevy Volt Sales
Sales of the much-hyped Chevy Volt fell to new lows as did GM share price as July auto sales figures came in. Only 125 Volts were sold during the month of July. Recent reports attributed the slump to supply constraints as GM spokeswoman, Michelle Bunker, was quoted as saying that the Volt was "virtually sold out" and only a "few" were available nationwide. I have confirmed that this statement is not entirely truthful and have gotten clarification from GM through Director of Communications, Greg Martin.
A search of cars.com site showed nearly 500 Chevy Volts listed for sale. I had originally assumed that GM dealers were advertising vehicles that were not actually available for sale, since GM has stated that there were only a "few" Volts available. I decided to call a few dealers within 75 miles of my location to determine what the true situation was. I stopped my research after finding that five of the first six dealers I called had Volts in inventory available for immediate sale. Two of the five dealers even had two each in stock. I can now safely assume that GM is, once again, not being entirely honest with its facts. The demand for the Chevy Volt is not as strong as GM would have us believe.
Martin confirmed that there are Volts available at dealerships. According to Martin, there are 116 new Chevy Volts available for sale to the public at dealerships, plus demo units that can be sold.
While I was discussing the situation, I also questioned recent comments from GM CEO, Dan Akerson, who stated on a CNN interview that GM had 35 to 40 billion dollars of cash on its balance sheets. The latest SEC reports listed current cash and cash equivalents at about 20 billion. Martin suggested waiting until Thursday's GM quarterly earnings report to see what the number looks like. I find it hard to believe that 15 to 20 billion dollars has materialized since the last earnings report. It is more likely that Mr. Akerson is either being dishonest regarding the true figure or totally uninformed about the financials of the company he manages. Judging from GM's modus operandi, I would guess that he is not being totally truthful.
Another question that arises is why the media is so gullible when it comes to reporting statements made by GM. The Chevy Volt comments are very easy to verify. It was not hard to get to the truth about the number of Volts available, why does the media spread the unfounded hype for the Chevy Volt? Why would the comment by GM on balance sheet cash go unchecked?
The Chevy Volt will not be a big seller for GM; the car just doesn't offer enough value to get a large part of the population to purchase one. The few consumers that choose to purchase seem to be satisfied with their decision, that's great. That doesn't mean that sales are going to take off just because GM will build them at a faster pace. I have to believe that GM knows this. I just can't figure out why they continue to play out the hoax that the Volt is going to be a blockbuster for the company. Perhaps they will sell a bunch to the Obama Administration (at a cost to taxpayers) and to GE (headed by Obama crony Jeff Immelt), but beyond that there will not be huge demand.
GM shares are trading at a new low today. This is indicative of the fact that the smart money on Wall Street is not buying into the GM hype. What bothers me most about the misleading media and analysts' coverage of GM is that the people who will get hurt the most are, once again, the little guys who have no one to look out for their interests. Institutional money managers know better than to buy on the GM hype. At the time of GM's IPO, some TV networks started a campaign to get all taxpayers to buy into the IPO so that they "could benefit." The implication was that GM had no where to go but up. Shares from that time are down about 20% and lagging the broader S&P by about 25%. I really have to wonder if there will be some liability for those who have hyped the GM story without proper disclosure that investors should seek advice from an investment adviser before making investment decisions. Particularly if that hype was in any way influenced by GM ad dollars.
Thursday's earnings report for GM will be closely watched. Analysts should be vigilant for any accounting shenanigans given the history of GM not being entirely truthful with the facts. And if GM shares continue to fall, some hard criticism should be leveled against the Treasury's decision to continue to risk taxpayer money on its GM gamble. Congress has much to consider investigating as the GM story unfolds.
Mark Modica is an NLPC Associate Fellow.