GM will temporarily down production of the Chevrolet Volt to bring inventory into sync with demand.
Facing a significant backlog of unsold inventory, General Motors will shut down production of the Chevrolet Volt for five weeks.
The maker has notified 1,300 workers at the GM plant in Detroit that they will be idled from March 19th through April 23rd while assembly operations at idled. But the maker insists the latest setback is not a sign of long-term problems for the plug-in hybrid, noting that Volt sales in February jumped 70% over the prior month.
“We’re going to do what we need to the keep production in line with what the market demands,” said GM spokesperson Michelle Malcho.
She noted that demand has been recovering in the wake of reports, late last year, that several Volt battery packs had caught fire following federal crash tests. After briefly opening an investigation into the problem, the National Highway Traffic Safety Administration gave the Chevy Volt a clean bill of health when GM announced it would take several steps to further reduce the risk of battery problems. The maker has stressed there have been no such incidents involving Volts in real-world use.
But the controversy escalated last month when California Republican Congressman Darrell Issa held a hearing on the Volt that critics said was primarily aimed at embarrassing the Obama Administration. Issa was a strong critic of the 2008-2009 federal bailout of GM and Chrysler.
In the wake of the original Volt fire news reports sales plunged, dipping to just 603 in January before rising to 1,023 last month. But while that was a significant upturn it is still well short of where GM had hoped to be.
The maker originally planned to produce about 10,000 Volts in 2011. It made that production target but rang up sales of only 7,671 of the battery cars. By comparison, Nissan sold nearly 10,000 of its Leaf battery-electric vehicles.
GM has promised to ramp up production of both the Volt and the similar Opel Ampera this year, with an initial target of 60,000 units – 75% of those vehicles intended for the U.S. market. Spokesperson Malcho declined to say whether the maker now will miss the 2012 target.
If anything, she said GM is “pleased with the enthusiasm” shown by initial Volt buyers. Significantly, when the maker offered to buy back the plug-in from owners worried about the safety of the Volt battery pack, only about a dozen took GM up on that offer.
And, if anything, Malcho insisted there has been a surge in demand in the California market since the beginning of this month when GM made modifications to the car’s backup gasoline drivetrain to further reduce emissions and qualify as a so-called P-ZEV vehicle under California law. That qualifies a buyer for the Golden State’s coveted HOV lane sticker – enabling them to drive in the quicker freeway carpool lanes without having two or more passengers onboard.
Despite that reported surge, however, the production cuts suggest that, on the whole, demand is still not keeping up with the projections GM initially made for 2012. Whether the pace will pick up later in the year remains to be seen.
Gas is at a record high. Why isn’t GM coming out with some really good ads for the volt to reflect that? This is a great opportunity for them to increase sales. Get the ads out there.
Goooood question. They’d likely argue they have been hitting that point. Let’s see if Joel Ewanick and his marketing whiz team will amp up the advertising in the weeks ahead.
Paul A. Eisenstein
Publisher, TheDetroitBureau.com
First of all, there should be Congressional hearings on Issa. He’s had quite a colorful past, and he is quite a piece of work. Considering his “panel” that he assembled for the hearings on contraceptives, all male, I’m surprised that his hearings on the Volt were not populated by another group of males, all Amish (I love the Amish, by the way, but you get my point).
The Volt? I’d love to have one, but GM has a car that is priced too high for its potential market. Even with the federal tax credit, most potential buyers are just not going to fork that kind of money out for a small car, especially when the new Malibu ECO gets really good gas mileage, is bigger and costs less.
Unless GM is willing to turn the Volt into some sort of a “loss leader’ in order to get the cars on the market, they are just going to have to suffer through slow sales, even if the price of gas does go to $5 a gallon.
I tend to agree that the pricing is the single biggest factor working against Volt — and that has been validated by several recent studies by J.D. Power and others.
Ironically, in decades past, GM likely would have priced it at a loss for the halo value. These days, the maker is sticking to policy by pricing products rationally and by matching production to demand. So, perhaps there is a positive side to this setback?
Paul A. Eisenstein
Publisher, TheDetroitBureau.com
Paul,
A 60 percent jump in sales is easy, with the base being so low. Let’s face it. The Volt will not be mainstream anytime in the future. With the buyer demographics showing the average buyer income at 160K, it’s likely that everyone who has become a Volt owner had money to throw away … likely their fourth or fifth vehicle in the household. GM is facing big problems and they’re not because of the NTHSA crash fire.
Hi, John,
No, as the 5-week shutdown illustrates, a 60% increase from a low base is NOT enough to make the Volt a success. They’re just back at where sales were prior to the NHTSA fire controversy. Now, the fact that they bounced back is at least something GM planners should be pleased with. And we’ll see if the arrival of the first California HOV-eligible Volts, this month, will boost demand in the Golden State. But the bottom line is that they (like the Nissan Leaf) need to be generating strong double-digit gains *every* month in the months ahead to show there’s a real market out there. At the current rate there is no way GM will come even close to the original 2012 plans for Volt.
Paul A. Eisenstein
Publisher, TheDetroitBureau.com
It’s interesting that there isn’t more discussion around the lease pricing for the Volt. If you compare the Volt lease price ($349 – 399/ mo after initial down payment of $2,500) to the lease price PLUS expected gasoline purchase for comparable vehicles, the Volt makes sense. Gasoline purchases would likely add $100 or more to most people’s total monthly vehicle expenditure. So comparing Volt to other vehicles available at $249 – 299/ mo doesn’t look so out of whack.