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March 12, 2012

Chevy Volt Failing, Why We're Not Surprised!

Last week, I discovered that General Motors had idled production of the Chevy Volt due to slow sales. The company had forecast 60,000 unit sales in 2012, however, through the end of February, the company had not sold 2,000. General Motors is on pace to sell 1/6th of its forecasted Volt sales this year.

The reason that the Volt appears to be failing is because we have a situation where the federal government is trying to move against what the public demands. The Chevy Volt is currently priced around $35,000 in an economy where consumers do not have that kind of money to spend. The government, on the other hand, pumped taxpayer dollars into General Motors (through subsidies and TARP) in an effort to generate Volt sales as the outcome.

In a previous article I wrote regarding TARP and General Motors, I noted (point #4), "At the bottom of page 11 (marked pg 7), the TREASURY identified the keys of viability for General Motors and Chrysler. One such characteristic for both companies was “improving product mix and moving towards fuel efficient vehicles.” The government attempted to write GM's strategic plan and maneuver its outcome.

Michael Sykuta at Truth on the Market, wrote a good article last week about the Chevy Volt subsidies. Milton Friedman also had a good description of subsidies in the video below. Is this what the government is going to turn to in order to bring the price of Volts down?

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