Markets trump politics.
GM considers pulling the plug on the Chevy Volt
The Chevy Volt was unveiled in 2010 to great fanfare. Politicians hailed it. The media gushed over it. The first electric car manufactured domestically, it was instantly a cause celebre, and it was hailed as part of the resurrection of General Motors.
There was one problem, though. The public was never excited about the Volt. With a price tag of more than $40,000, even government rebates of $7,500 weren't enough tto convince many people to buy a Volt. It drives well enough and it's true that you don't have to put much gas in it (although you do need some in reserve just in case), but that type of price tag isn't within reach for most people, and GM seems to have forgotten that electricity isn't free either.
Today, with the Volt continuing to disappoint, it is now on the
chopping block and may be eliminated entirely from GM's lineup by 2020:
GM has cut shifts at several U.S. plants this year as inventories of unsold cars have ballooned. Industry analysts said more jobs could be at risk as the automaker wrestles with permanently shrinking production of small and midsized sedans.
GM is reviewing whether to cancel at least six passenger cars in the U.S. market after 2020, including the Chevrolet Volt hybrid, which could be replaced in 2022 with a new gasoline-electric crossover model, Reuters has learned from people familiar with the plans.
Other GM cars at risk include the Buick LaCrosse, Cadillac CT6, Cadillac XTS, Chevrolet Impala and Chevrolet Sonic, sources said.
Some analysts have singled out GM’s Hamtramck plant in Detroit as one of the most vulnerable because of plummeting car sales.
The plant, which opened in 1985, builds four slow-selling models: Buick LaCrosse, Chevrolet Impala, Cadillac CT6 and Chevrolet Volt.
GM doubled down on Volt production
The Hamtramck plant is particularly vulnerable because GM doubled down on Volt production there even as the car was consistently failing to live up to sales goals, even adding an extra shift and vowing to produce even more Volts.
None of this ever made sense. Last year, even as it introduced a "second-generation" of the car, GM sold just over 23,000 Volts after a putrid year selling just over 15,000 in 2015. Yet GM ramped up capacity at Hamtramck to be able to produce as many as 60,000 cars in a year. The UAW loved it, and politicians were pleased that GM was "creating jobs" while making this green car.
But it wasn't making any money.
This is part of a broader conflict that's existed for some time between politicians and the auto industry. Politicians want to see small, compact cars that get phenomenal gas mileage, and the try to make this happen with Corporate Average Fuel Economy standards and with bribes to consumers to buy the smaller cars.
The politicians' agenda for the auto industry simply isn't one that helps the industry turn a profit
But by and large, consumers don't want the smaller cars. They want trucks and SUVs, and those are the vehicles that earn a profit for the Big Three automakers. The politicians' agenda for the auto industry simply isn't one that helps the industry turn a profit.
Then again, it's hard to say no to Washington when you have to go there every generation or so with hat in hand because your insane business practices require you to beg for another bailout. The UAW basically owns the Democratic Party in Michigan, and the Big Three buy the favor of Democrat politicians by giving the UAW just about anything it wants. That's how they end up with out-of-control labor costs, and it's why they'll struggle to shut down plants that are losing them money.
But GM could start by making cars people want to buy at prices they can afford, instead of making cars no one wants and no one can afford, but that make their patrons in Washington happy.
Dan Calabrese -- Bio and
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Dan Calabrese’s column is distributed by HermanCain.com, which can be found at HermanCain
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