Reality Sucks for Chevy Volt Sales

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Akerson and Volt photoLast week we had the marketing whizzes at General Motors apologizing for its "reality sucks" ad campaign (see story here) around the same time that Chevy dealer and congressman, Mike Kelly, was revealing that there is very little demand for the much-hyped, taxpayer-funded Chevy Volt. The reality of the limitations of the Volt seems to be something that GM execs do not want to face. Worse yet, Government Motors continues to try and convince the American taxpayers, who spent billions of dollars to develop and sell the Volt, that demand is wonderful and it is supply that is lagging.

Thetruthaboutcars.com reported that Kelly stated the Chevy Volt made "absolutely no sense" and that his Chevy dealership had one that he has been unable to sell for four weeks which could possibly sit there for a year until such time that the price would have to be reduced for a sale. He also mentioned that Pennsylvania would be adding a tax credit of $3,500 to the $7,500 federal credit for purchasers of the Volt bringing the total taxpayer burden to $11,000 on each vehicle sold; $11, 000 that is going to the wealthy folks who can afford the Volt. That's in addition to the billions of taxpayer dollars spent to this point to get the car to market. As far as for who is buying the vehicles, Kelly says it is mostly "people who have an academic interest in it, or municipalities." The municipality part makes sense, as I recently discovered that GM sold some of the $40,000 Volts to a NY municipality at a price of $29,500 each.

The controversy continues regarding the true demand for the Volt as supporter of the vehicle, Rep. Jackie Speier of California, claimed that there is a six month waiting list for the vehicle in her state. While I am sure that there might be some dealerships that have less than the two or three cars that consumers wish to purchase at their showrooms, evidence continues to mount that Volts are not flying off of the lots; at least not to individual consumers.

GM recently ramped up production of the Volt. They also announced that a planned second shift did not have to be added to manufacture the amount of cars needed. As dealerships raised inventory of the Volt, sales in September increased to a paltry 723. Some of these were sold at reduced prices to municipalities, as I previously mentioned. It is unclear how many of the Volts planned for production will be purchased by individual consumers and how many from government entities or Obama crony company, GE, which benefits from selling charging stations for the plug-in vehicles. Today's search on cars.com revealed 3301 new Volts advertised for sale nationwide. For anyone wanting to confirm the true situation for Volt demand, a few phone calls to local dealers should be able to prove that the vehicles are out there and available for sale in most areas.

Back in May of this year, I reported that dealerships (including a Kia/Hyundai dealer in California) were purchasing Volts from one another and may have been gaming the tax credits. I also suggested that demand was not that high if dealerships were giving up the supposedly hard to find cars. My recent search unveiled a vehicle (identified with stock number and VIN) that has been advertised as a used vehicle at the Kia/Hyundai dealer since the beginning of this year. I went on an online chat to try and determine if the vehicle that had been advertised for about 10 months was still available. Here's how the conversation went:

Salesman: Hello, my name is (salesman's name); may I ask your name?

Me: Hi, is Chevy Volt stock #P10047 still available?

Salesman: We have rented this vehicle, will be back Tuesday. Would you like me to contact you when it comes back?

Me: Has price been reduced yet?

Salesman: I am sure we will reduce it once it comes back.

Me: Haven't you had this vehicle in stock for quite some time?

.....

Me: Hello?

....

Me: Are you working on a manager T.O.?

End of conversation.

The Volt that I inquired about was advertised with 1,147 miles on it. Hardly enough miles for me to believe that this vehicle has been in a rental fleet for 10 months. Additionally, dealerships have regulations requiring that vehicles advertised be available for sale. Unless dealerships are advertising vehicles (with VIN numbers) that do not actually exist, I have to assume that GM is not being honest with their claims that there are only hundreds of Volts at dealerships currently available. I have also heard other stories of Volts sitting on lots for months, and I am sure many of the currently advertised vehicles on cars.com have been there for awhile. Add these facts to the fact that GM is willing to sell a car that lists for over $40,000 to municipalities with a discount of over $10,000 and it becomes clear to me that demand for the Volt is underwhelming.

The Chevy Volt could have been a promising beginning for a new technology which was not quite ready for primetime, but had some promise as a platform to build upon. Instead, it became an over-hyped and divisive symbol of unethical corporate practices, taxpayer abuse, government ineptness regarding wasteful green initiatives and corporate cronyism all rolled up in one. GM has taken billions of taxpayer dollars to produce a car that was to be a game-changer for the industry and savior for the environment, GM and foreign oil dependence. All while the underlying intent was to use the vehicle as a "halo" car that would drive consumers into showrooms so that GM could sell alternate conventional vehicles, like the Chevy Cruze. And now as we approach the time that the hype for the Volt will die down, GM plans to play the same game with an electric version of the Chevy Spark, which is expected to be built in South Korea.

Although new GM has technically only been in existence for a little over two years, it continues to operate under a culture of deception that has predated its manipulated bankruptcy restructuring. GM execs claim that true Volt demand can not be determined for months yet. Why not? GM also refuses to admit that the Chevy Spark will be built in Korea, as admitted by GM Director of Communications, Greg Martin. And if you have any doubts that GM stands for Government Motors, just look at the politically motivated moves to push green vehicles that have little market appeal while President Obama tours GM plants in Michigan with the South Korean President just as news hits that GM will build its new "halo" car in South Korea.

It is well past the time for congress to investigate the costs versus merits on the Chevy Volt folly. The costs to taxpayers on the Solyndra scandal pale in comparison to the costs of the GM and Government project to attempt the unwanted electrification of America's auto fleet. Left unchecked, the Obama Administration will continue to funnel money into GM and crony corporations like GE, whether it is through green initiatives, government auto fleet purchases (up 26% in September), tax credits or auto financing from government owned Ally Financial. Treasury should sell its stake in GM and Ally financial and get out of the auto business. Unprofitable green initiative spending by our government that does little to benefit American job growth or the environment should be kept in check. It is time for politicians and GM execs to accept the reality, even if it sucks; America just can't afford it anymore.

Mark Modica is an NLPC Associate Fellow.