Government Motors Selling Volts Cheap as Elections Near
General Motors continues to claim that demand will drive Chevy Volt sales and 10,000 of the vehicles will be sold in 2011, even as September sales came in at a still disappointing dismal rate of 723 units sold. GM has staked its credibility on the success of the much-hyped hybrid. The Obama Administration also risks another embarrassment if Volt sales continue to underwhelm following the Solyndra scandal that saw a similar failed green energy initiative lead to a 500 million dollar loss on its taxpayer funded gamble. Now we learn that GM has been selling the $40,000 plus vehicles for as low as $29,500 each according to the gmauthority.com site. How far will GM and the Administration go to pump sales figures to persuade the public that the Chevy Volt is a green success story that justifies the spending of billions of taxpayer dollars on such initiatives?
Years ago taxpayer money was dedicated to retool factories for production of the Volt. For some reason, ramping up of production did not occur until recently. Although GM claimed it could not build vehicles fast enough, a great deal of taxpayer money was spent hyping a vehicle that could not sell more than a few hundred per month. As far back as 2008, the marketing geniuses at GM even produced a song and dance (literally) to promote the vehicle, as shown on this aol site. With sales strategies like these, is it any wonder that GM share price continues to slump?
So we now come to the important questions. Was taxpayer money spent to hype the Volt in order to drive showroom traffic in an effort to sell alternative vehicles as part of a bait and switch ploy? Does the timing of GM ramping up of production and fleet sales have anything to do with the coinciding 2012 presidential elections? Will Obama crony corporation, GE, make good on their promise to purchase tens of thousands of Volts just as we approach the elections? How about government fleet purchases (side note: September government fleet purchases of GM vehicles increased 26% year over year.) Will even more taxpayer money be spent to purchase vehicles in an effort to prove that the Chevy Volt is a huge success? Why is GM giving the technology to China if the Volt is so revolutionary?
I have previously pointed out signs that demand for the Volt is not as high as implied. Chevy dealers would not have been giving up the vehicles to other dealerships if there was a waiting list of retail customers that were willing to pay much more. Also, as GM claimed the vehicles were "virtually" sold out, inventory was available and soon would be growing. And now we have Volts selling for only $29,500, why would GM accept such a low price if consumers are knocking down the doors to pay over $40,000?
A politically motivated corporation with government ties would not put shareholders (and taxpayers) ahead of its political goals. I am sure we will soon see headlines that boast of "electrifying" sales of the Volt as GM "revs up" production when monthly sales of the vehicles increase from a dismally horrible few hundred a month to a barely mediocre couple of thousand per month. The important stats to watch are, who is buying the vehicles and how much is GM profiting from the sales. The Volt loses money for GM, its shareholders and the American taxpayer. GM loses even more when they sell them at heavily discounted fleet prices. But government run entities never seem to be too concerned with profitability or conservation of taxpayer funds.
I think that GM and the Obama Administration know that many people are aware of the less than stellar success or benefits of the Chevy Volt and that the vehicle would have no chance of standing on its own without taxpayer subsidies. The trick is to convince enough people that the vehicle is a bold venture into a new green driven economy to justify the heavy tax subsidies. It is up to the media along with our elected officials to decide if they want to continue to promote green initiatives that carry huge costs to taxpayers while offering little in the way of environmental benefits or the lessening of America's foreign oil dependence. Let's hope they choose wisely.
Mark Modica is an NLPC Associate Fellow.