Dismal Sales for Chevy Volt in January

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Chevy Volt Akerson photoJanuary's dismal numbers for Chevy Volt sales may give a clue as to how successful (or not) President Obama will be in reaching his goal of having a million electric vehicles (EVs) on American roads within the next few years, a goal that is increasingly becoming unlikely. It also gives us a glimpse into a bizarre strategy General Motors has had by focusing so strongly on plug-in cars while they lose market share elsewhere. The numbers are in, and GM can proudly say that they are the market leader in an insignificant field with a paltry 1,140 Volts sold in January. The best selling passenger car on the road, the Toyota Camry, sold 31,897 during the month, giving an indication of how illogical GM's misguided focus has been.

GM's lame reasoning for the post-election lows (actually, the lowest since February of 2012) for Volt sales is that consumers pulled sales from January by purchasing in December of 2012 when GM sold a whopping 2,633 Volts. In the scenario GM presents, this means that sales for Volts can be expected to average fewer than 2,000 a month in the absence of money-losing incentives to sell Volts. GM has previously admitted that there is no market for the Volt and that demand was manufactured by incentivizing short term leases that end up costing taxpayers about $10 for every gallon of gas saved by the Volt. These money-losing leases drove about two-thirds of the politically-charged Volt's "sales" leading up to the presidential election and were funded by government-owned Ally Financial.

A recent search for Volt inventory on cars.com reveals that there are over 4,300 new Chevy Volts available for sale nationwide. GM has had a history of blaming low supply for disappointing Volt sales, despite all evidence to the contrary. It is obvious that a lack of demand is the reason for the low sales, not a lack of supply. In fact, GM has repeatedly cut supply as sales of Volts consistently failed to live up to expectations, yet the Obama-appointed management at GM continues its focus on plug-in vehicles, even though the facts show that there is little demand.

GM's plug-in EV focus sees the company now planning for a plug-in version of the Chevy Cruze (the same platform as the Volt), a Cadillac version of the Volt, and the recently unveiled plug-in Chevy Spark. The insane money-losing strategy of building cars that consumers do not seem to want is costing both shareholders and the taxpayers who are funding the technology with billions of dollars. A recent Congressional Budget Office report revealed that the money is not well spent and that taxpayers will pay about $7.5 billion on EV subsidies over the next few years for little benefit.

Critics of the Volt would not really care about the dismal sales if taxpayers were not paying for the folly. If a private sector company foolishly follows a money-losing strategy for ideological reasons, that's their choice. But the Volt was and is funded with taxpayer money. Further, most financing comes from taxpayer-owned Ally Financial, which the Obama Administration has refused to exit while GM is reliant upon the funding. This refusal has been criticized by a government watchdog in a recent report.

There is also a major concern with the dishonesty that GM has exhibited over the potential for the Chevy Volt. The Volt was touted as a "game-changer" for GM as taxpayer money was lobbied for during the company's bailout process. The media pumped GM's hype and expectations were that the Volt would be selling about 20,000 a month by now, not 2,000! When expectations fell far short, GM lied about the reasons for the failure, first blaming low supply and, even more bizarrely, a right wing conspiracy to discredit the car. How unethical is it for a company supported by a Democratic President to make political statements against Republicans and help the benevolent sitting president to win reelection?

If GM is dishonest about demand and potential for the Chevy Volt, how can they be trusted elsewhere? Why would consumers want to buy cars from a company that has displayed a tendency to allow political motivations to overrule ethics and honesty? Why would shareholders invest in such a company?

It is past time for GM to start being honest about the Chevy Volt. If the true sales potential for the car is a couple of thousand a month, just say so instead of wasting more money trying to manufacture demand and extending the hoax. Most importantly, it is time for the Obama-appointed management to move on and for the government to exit its stake in both GM and Ally Financial. Hopefully, the next generation of leadership at GM can focus on building cars that Americans want with a loyalty towards shareholders; not to politicians.

Mark Modica is an NLPC Associate Fellow.