"To announce that there must be no criticism of the president, or that we are to stand by the president, right or wrong, is not only unpatriotic and servile, but is morally treasonable to the American public." -- Theodore Roosevelt


One of Salem Oregon's Unofficial Top 1000 Conservative Political Bloggers!!!

Saturday, September 22, 2012

GM Losing Up to $30,000+ per Car on Chevy Volt




The Chevy Volt appeared to be a loser from the beginning. After bailing out GM, though mostly the UAW, the Obama Administration and the feds put some pressure on to promote the "enviro-friendly" car-- possibly as part of their windmills and unicorns green initiative. Of course the fact that the car isn't economically viable is of little consequence to people who spent more than $5 trillion dollars over the course of four years.

From the AP via Breitbart:

"General Motors rolled out the Chevrolet Volt two years ago with lofty sales goals and the promise of a new technology that someday would help end America's dependence on oil.

"So it seemed like a good thing in August when sales of the $40,000 car set a monthly record of 2,800. But a closer look shows that things aren't what they seem for the cutting-edge car.
"
Sales rose mostly because of discounts of almost $10,000, or 25 percent of the Volt's sticker price, according to figures from TrueCar.com, an auto pricing website. Other pricing services gave similar numbers, and dealers confirmed that steeply discounted Volts are selling better than a few months ago.

"GM's discounts on the Volt are more than four times the industry's per-vehicle average, according to TrueCar estimates. Edmunds.com and J.D. Power and Associates say they're about three times the average. Discounts include low-interest financing, cash discounts to buyers, sales bonuses to dealers, and subsidized leases.

"Americans have been slow to embrace electric cars. But the Volt's August sales show they're willing to buy if prices are low enough. Even so, electrics have a long way to go before they enter the mainstream and make money for car companies. Electrics and gas-electric hybrids account for just 3.5 percent of U.S. auto sales this year. GM is losing thousands of dollars on every Volt, raising the question of how long it can keep eating the steep losses.

"For the foreseeable future, carmakers will have to cut prices to move electric vehicles off dealer lots. The nonpartisan Congressional Budget Office says the cost of electric cars must drop to be competitive with gasoline-powered ones."
Does it really require the CBO to point out that people won't pay more for a substandard car? The CBO is probably wrong though. I would suggest that the cost of an electric must become less than the gasoline equivalent before people begin to buy them. Fair or not, the electric car has a reputation for safety issues that must be overcome. Americans are generally willing to pay a little more for a greater sense of safety. Let's see some crash tests of the Prius compared to a comparable gas-powered car, please.

The article continues:

"GM executives have conceded from the start that they were losing money on the Volt, and that was before the big discounts.

"Now the losses could be even higher. It costs $60,000 to $75,000 to build a Volt, including development, manufacturing and raw materials, estimates Sandy Munro, president of Munro & Associates, a Troy, Mich., a company that analyzes vehicle production expenses for automakers. Much of the cost comes from an expensive combination of two power systems _ electric and gasoline. With a sticker price of $40,000, minus the $10,000 the company pays in incentives, GM gets roughly $30,000 for every Volt. So it could be losing at least $30,000 per car.

"'It certainly wasn't a rousing success,' Carter Driscoll, senior analyst for CapStone Investments who follows electric cars, says of the Volt.

"GM confirmed there are incentives on the Volt and that the company loses money on the car. But the automaker declined to give figures for the discounts or the losses. The figures exclude a federal tax credit that goes to buyers.

"The automaker says Munro's estimate is high because it doesn't spread the Volt's costs far enough into the future, when more Volts will be sold. Automakers typically spend $1 billion or more to develop a car, and sometimes don't recoup the investment and start making money until late in its life. Also, Volt technology will be used in future cars and trucks, eventually leading to profits, the company says.

"GM spokesman Jim Cain says most of the Volt discounts come in the form of lease deals, which account for about two-thirds of sales. In some markets, Volts can be leased for $249 per month with $2,400 down."

Oh, come on... You're going to lose $30,000 (om the low end) for every car that you sell, and then you try to make up your "$1 billion or more to develop a car" in volume and technology development? How many more models of hybrids are you going to lose tens of thousands of dollars on per unit? Get real.

But hey, don't worry. Maybe the American taxpayer can subsidize it. Oh, wait....

"The pricey car hit showrooms when many buyers were reeling from the bad economy and turned off by the government's $50 billion bailout of GM.

"'Let's face it, over $40,000 is asking a lot for a compact car,' says Bob Lutz, a retired GM vice chairman who led the development of the Volt.

"Even a $7,500 federal tax credit, which dropped the Volt's sticker price to $33,500, did little to promote sales. The car cost $7,000 more than the Leaf, and $13,000 above a well-equipped compact with a gas engine.

"As it reached more dealers in 2011, the Volt had to overcome more than a high price and recession-weary Americans. The government found that the battery could catch fire after crash tests."

So GM is alive, is it? When is the next bailout scheduled? Oh right, after the election on a Friday evening. Or on Christmas Eve.

From the Washington Examiner:

"Despite having billions in crushing debts wiped off its books, and being given billions more in special future tax breaks, New GM has lost about one-third of its value in under two years. It continues to lose market share in auto sales, down two points to 18.1 percent of the U.S. market year-to-date, as Toyota and Honda gain. The Obama administration's failure to extract serious concessions from the United Auto Workers union, and its new regulations that slant the playing field toward a "greener" market that foreign automakers dominate, are precipitating another Detroit catastrophe. Even worse, the U.S. Treasury still owns more than a quarter of GM stock. Unless the share price doubles, taxpayers cannot unload their shares without enormous losses.

"Based on Reuters' calculations, GM has lost over $600 million on the Volt alone. It could lose more than $1 billion on its European Opel division in 2012. Forbes has speculated that GM will need another bailout in the next few years."

Don't worry. GM will make it up in volume.

No comments:

Post a Comment