Chevy Volt September Sales Plunge - Cost Taxpayers over $13 Million
General Motors reported unimpressive sales results for the month of September as sales fell 11%. Core division, Chevrolet, performed the worst with sales down almost 15% year over year. Within that division, sales for the much-hyped Chevy Volt could not even be propped up with its recent $5,000 price cut as results declined to a measly 1,766 units (less than one per dealership) in September. That is a decline of over 38% year over year and just over half of what sold in the previous month.
The floundering sales of the Volt saved taxpayers some money over August when federal subsidies totaled more than $25 million. The federal tax credits for September ring in at about $13.2 million. Taxpayers are on the hook for millions of dollars more in state subsidies, as well.
My best guess for why sales of the unwanted Volt are doing so poorly compared to previous months, despite GM's Obama-appointed management's efforts to continue to try and prop up the President's favorite car, is that lease residuals must have been reset to more accurately reflect the rapidly depreciating resale values of the car. GM has been able to manufacture demand for the vehicle in the past by manipulating leases.
Over half of the Volts on the road are there temporarily, as taxpayers pay $7,500 for a federal tax credit to keep each leased car on the road for as short a term as two years. Government-owned Ally Financial, which supplies most of the leases, must have finally realized the problems that are resulting as the Volts go back on the market as used vehicles for prices well below what the lease residual values were.
The best indicator of value for used Chevy Volts would be what the vehicles are selling for at auto auctions. A search of Manheim's auction site comes up with a recent value for 2012 used Volts of under $21,000. That's approximately half of what the cars' retail price was when they were "sold" just a year or two ago. Of course, losses to taxpayers for the subsidies and dealer discounts and incentives bring the cost of Volts down for lease calculations. More accurately, the costs for Volts do not go down because of subsidies and incentives, they are only transferred to taxpayers and GM shareholders who must absorb those costs.
If you are amongst those who believe that it is ridiculous to lose millions of dollars per month on electric vehicle tax subsidies for wealthy purchasers or lessees of cars like Chevy Volts (or worse yet, $100,000 Teslas), it seems that you are in the minority. GM continues to tout its green image by trying to fool the public into believing that the Volt is significantly improving America's environment and will help save the planet from global warming as it once again relies on taxpayers to pay the cost. As members of both parties of our country's leadership engage in a political fight over the budget and Obamacare, few in Congress or the White House seem to really care about where taxpayer money is being wasted. It appears that the costly and illogical green ideologies will continue, along with the rest of crony capitalism, as America's taxpayers foot the bill.
Mark Modica is an NLPC Associate Fellow.