General Motors plans suspension of Chevy Volt production as sales sputter
Later this month, General Motors will temporarily stop production on its plug-in electric hybrid, the Chevy Volt. Sales of the vehicle have been below expectations and rather than start discounting the vehicle, General Motors will try to sell through inventory before restoring production.
General Motors is unplugging the production line for it's electric Chevy Volt.
The factory in Detroit where the cars are manufactured will undergo a five-week shutdown as the vehicles sell more slowly than had been anticipated. According to Bloomberg, GM will stop making Volts from March 19 through April 23.
In February, just 1,023 Volts were sold, far short of the number to meet the 45,000 sales planned for the year. With production running full-out, GM had to choose between turning off the assembly line or offering deep discounts to keep the inventory moving, or halting production while vehicles sell through.
Tim Higgins, automotive correspondent for Bloomberg News, said the Volt has had a lot of issues that have led to its low sales figures, including bad publicity stemming from a government investigation of the vehicle's safety surrounding flammability. Though the Volt got a clean bill of health from the government, there were a number of headlines questioning the vehicle's safety.
"That was followed up by a Congressional hearing and it's really become a political punching bag in the campaign season," Higgins said. "It's gathering a lot of attention that's not positive."
GM has launched a major ad campaign to try and "set the record straight" about the Volt. Higgins said it's too soon to tell whether the ad campaign is having the desired impact.
"January and February aren't necessarily the greatest time to be selling cars," he said.
But even beyond the bad publicity, the Volt is, very simply, very expensive. It sells for about $40,000 a year, though a tax break does push it down into the mid-$30,000 range.
"Some people have a hard time making the case for buying it," Higgins said.
The Nissan Leaf, a competitor, sells for about $27,000 after the tax break, though its range is more limited and doesn't have a supplementary gasoline engine, like the Volt.
Competition for the Volt and other cars like it, including a plug-in Toyota Prius set to launch this year, will also be expected to eat into the vehicle's market.
Automakers are also making fuel-efficient traditional gasoline engines, which provide competition to these electric cars, Higgins said. For example, customers can get the similarly sized Chevy Cruze for much less than that, about $17,000. Sales were up 10 percent last month for the Cruze.
Higgins said GM may have to confront the reality that their expectations for sales, even without the negative publicity, are just too high.
"GM even notes that when Toyota launched its Prius, it wasn't immediately knocking it out of the ballpark," Higgins said. "It took a little while to start gaining sales momentum."
And rather than drop the price to try and get sales moving, GM is standing firm in what Higgins said is an effort to protect the brand.
"They don't want to diminish the vehicle's brand going forward by starting to put heavy discounts on it, something that doesn't end well in the longrun," Higgins said.
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