Why Can't Akerson Come Clean on Chevy Volt Fiasco?

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Akerson and Volt photoSome truths are so obvious that they cannot be denied. But that doesn't stop General Motors and politically-motivated cheerleaders for the Chevy Volt from trying. In the case of the Volt, the truth is that this car has been a dismal failure when considering the amount of hype and taxpayer money that has been spent to produce the supposed green wonder-car. Let's review just how wrong GM CEO, Dan Akerson, has been regarding sales projections for the Volt and how he refuses to take accountability for GM's blunders. 

Let's start by looking at Akerson's plans and projections for the Volt back in January of 2011, two months after GM's much-hyped IPO. From a Bloomberg report at the time, Akerson touted sales expectations for 2011 of 25,000 for the Volt. An even rosier sales projection for 2012 was made as Akerson's plans for selling 120,000 Volts were revealed to a non-sceptical media. From the article, '"We want to stay sharply focused on technology," Akerson told analysts at Deutsche Bank's Auto Industry Conference in Detroit on Jan. 11. "We don't want to be caught flat-footed as we were in 2008."' And, "Akerson told his executive team in early December that he wanted to boost Volt production and explore adding its drive system to several models with a goal of at least tripling sales of vehicles with that technology by mid-decade from the 2012 target."

So, how close did Akerson's sales projections come? GM sold 7,671 Volts in 2011 and 2012 sales are currently at 10,666, tracking about 19,000 for 2012. Not even close to Akerson's planned sales of 25,000 and 120,000, respectively! Even worse than Akerson's ineptness at predicting the popularity of the Volt is his refusal to take accountability for the blunder. Another Bloomberg article from June of this year has Akerson, in Obamian fashion, blaming Republicans for the Chevy Volt disappointment. The article states Akerson, "said that politics have affected Volt sales. GM reorganized under a U.S.-backed bankruptcy in 2009, which has been criticized by Republicans, including Mitt Romney, the party's presumed presidential nominee." Akerson also stated that he thinks GM will still sell 35,000 to 40,000 Volts this year, an unlikely feat.

It is time for GM and Akerson to take some accountability for the Volt missteps. It is not the fault of Republicans, or any other critic of the Volt, that the vehicle is so far off of initial sales projections. The simple fact that other plug-in vehicles are selling even more dismally than the Volt gives evidence that GM has put a major focus on a segment which does not have mass-market appeal.

In June of this year, Ford sold only 89 plug-in electric cars and Mitsubishi only 33. Of course, you probably weren't very aware of these competing vehicles, as Ford and Mitsubishi have not spent the disproportionate amount of time and money marketing and producing their plug-in cars as GM has. It is also very disingenuous for Akerson and GM to blame low Volt sales on politicians while they tout the fact that they are selling more electric cars than competing vehicles like the Nissan Leaf. Wouldn't it stand to reason that the Volt would be selling less than competing vehicles if only the Volt was being criticized for political reasons? It is equally disengenous to boast of Volt sales of less than 2,000 a month as "successful" based on weak comparisons when projections were for sales in the range of 10,000 per month by now for a car that was to be a "game changer" and "the future of GM."

We must come to the conclusion that GM, specifically Akerson, has been dishonest in touting the potential for the Volt and the reasons for the low sales, or GM management is simply that inept that they were so far off in sales projections for the vehicle. GM may have had an ulterior motive in hyping a vehicle that had no chance of reaching the high goals set for it. The use of the Volt as a "halo" car has been admitted by GM management. Essentially, GM used the Volt to lure consumers into showrooms to bait and switch them to a conventionally powered vehicle.

An Edmunds Insideline piece explains the strategy and quotes GM North America President, Mark Reuss, as he admits the ploy. From the article:

Meanwhile, Chevrolet's bet-the-farm project, the Volt, will continue to gain sales, Reuss said. But perhaps even more important for Chevrolet is the car's "technical halo." Drawn by their curiosity about the Volt's plug-in hybrid technology, consumers come to showrooms. And after they check out the Volt, they stay around to look at, drive and maybe buy a Cruze, he said.

"People want to see the Volt," he said. "Not everyone wants to buy a Volt." Reuss acknowledged that in a down economy, not everyone can afford a car that goes for $40,000 (before a federal tax credit of up to $7,500).

But those Volt visits are leading to Cruze sales, he said. Reuss said he believes the same thing will happen with the plug-in hybrid Cadillac ELR, "a beautiful car" that could perk up sales of conventional Cadillacs.

The use of halo cars by manufacturers is common. What has been unquestioned, however, is whether taxpayer money should be used to produce a vehicle, under the guise of helping America end foreign oil dependence, only to have that money go to help sell conventionally-powered vehicles. And GM's "bet-the-farm" focus on the Volt has left it at a competitive disadvantage as they have lost ground in the more important mainstream segments of the industry. The Chevy Malibu is no where to be found on recent top-selling car lists as cars like the Honda Accord, Toyota Camry, Hyundai Sonata, Nissan Altima, and Ford Fusion all make the grade.

Time and again Akerson and GM management have had the opportunity to come clean on the Chevy Volt. All they had to say was something like, "the Volt is a niche vehicle that holds promise for future development of electric vehicles that may one day build upon the platform to offer an alternatively-powered vehicle that has mass-market appeal." Instead, they have been deceptive and over-touted the potential for the car. Worse yet, they played the political card in blaming Republicans for the failure at a time that President Obama campaigns upon the perceived success at GM. If GM is ever to regain the trust of car buyers and the American taxpayers that have bailed them out, they need to act in a less deceptive manner; starting with telling the truth about the Chevy Volt.

Mark Modica is an NLPC Associate Fellow.