What anomaly is that? It is never GM who is bungling things, it is the number that is lying. What a bunch of BS. The Volt is a loser and everyone knows it. Even massive tax credits can't move that turkey.
Posted on 06/02/2011 8:43:02 AM PDT by jazusamo
General Motors shares fell 5% on Wednesday after May auto sales figures were reported. Most auto manufacturers were hit as sales for the industry fell pretty much across the board. Excuses for the industry shortfall ranged from higher prices for vehicles to Japan parts shortages. GM cannot claim the latter, since they earlier declared that there were no issues with parts supplies. The one telling statistic on GM is one that was not reported in most of the media coverage, which was the fact that incentives at the automaker were, once again, well above industry averages.
According to Edmunds, the "true cost of incentives" per vehicle at GM was $3,373 per vehicle compared to an industry average of $2,094. Ford's incentives came in at $2,283. GM was not willing to discuss the numbers during its sales conference call, rather citing an "anomaly" for incentives during the month. Well, that's reassuring. The facts we can come away with is that pricing power in the auto industry is not as strong as many assumed and that GM continues to spend more money than the competition when it comes to incentives. Consumers are pulling back on spending for autos if the deals are not there.
Auto pundits may also be incorrect in assuming that normalized sales for the industry are in the 16 million unit annual range. I was in the car business during the years that sales were at these levels and I don't believe these are normalized levels. At the time, many customers were coming in with home equity checks and paying cash for new vehicles. Cash was loose with parents buying new cars for kids going off to college and credit was very easy with many sub-prime deals being approved as the bubble was building. When the bubble burst, sales dropped to a rate that was also not normalized, nearer the 8 million unit range for annualized sales. I would guess that a normalized rate would be somewhere between these numbers, perhaps closer to the 16 million, but certainly not a given that sales should return to that level anytime soon. Annualized sales for the industry in May were about 12 million.
The take-away from the May figures is that the industry is still very competitive and sales are dependent upon macroeconomic factors. Investors should be cautious basing decisions on rosy projections by pundits. GM is particularly at risk if their spending continues to exceed those of its competitors and consumers continue to be tight with their spending.
GM's sales for the Chevy Volt in May fell to 481 units. Many apologists for the Volt will continue to claim that supply is still not available to meet the strong demand. It certainly doesn't seem that way to me, but time will tell. I recently reported that Chevy dealers, and others, might be gaming Chevy Volt tax credits speculating that demand could not be that high if Chevy dealers were selling inventory to other dealerships. The report has stirred much debate. Most feedback agrees with the assertion that dealerships taking tax credits is wrong, but some accusations have been made that the report was biased by a right wing hatred for green autos. This seems to be a popular political tactic used when certain ideologies are presented with criticism; ignore the facts and attack the source. NY Times writer, Mary Chapman, did a good job following up on the facts in her piece today.
Let's summarize a few points. The Chevy Volt loses money for GM (and subsequently for taxpayers). Investors should question a management team that focuses on sales of a vehicle that loses money. I don't really care how many sell, and I'm sure GE and the federal government will make purchases and prop up sales soon. Regarding tax credits the fact remains, as confirmed by GM, that dealerships are taking the $7,500 tax credit by purchasing vehicles and reselling as used. If there are those that are OK with this, so be it. There is, however, a simple solution for tax credit abuse that even the most loyal Chevy Volt fans should have no argument with.
The main concern with the plug-in hybrid tax credit that I have is that, in addition to dealerships taking tax credits designed for consumers, double claiming of the benefit is likely. Yes, that's speculation and no, it can not be proven at this point. But why would anyone disagree that a simple change to IRS form 8936, which is used to claim the credit, should be made? A field should be added for the VIN to safeguard against abuse. While I do not blame GM for dealership tactics, I believe they do have a responsibility to oversee the behavior of its dealerships. GM and Treasury should work together and get it done to protect taxpayers that have already sunk a lot of money into the auto bailouts. Can anyone argue with that?
GM is the microsoft of the auto industry.
P*ss poor engineering, leadership by folks who couldn’t spell quality if their lives depended on it, and generally sleazy business practices throughout their sorry corporate existence.
May they both go the same place - and please say hello to Bin Laden when they arrive.
It mentions that Chevy dealers are selling Volts to other Chevy dealers so they can pocket a $7,500 govt kickback. I’m guessing that there are so few Volts being sold overall that the sales between dealers are probably skewing the sales figures.
But the Financial Times just reported that Obama will campaign on his bailout of the auto industry.
A few articles were written calling Modica many unsavory things when he first made the accusations but GM came out and admitted it.
GM Admits that Dealerships are Taking Chevy Volt Tax Credits
I’ve never been a big fan of GM, although (because?) I have owned a couple of their cars, but the bailout settled my view of the company permanently. I am boycotting GM forever and will never buy any GM product at any price or for any reason. The violation of bankruptcy law and contract law when they stiffed the bondholders was shocking even by government standards, and I am boycotting them forever - except for cheering their slow and painful demise. I do not deal with crooks, and anyone with the same values will also boycott GM.
I hope it backfires big time on him. He’ll already have the union vote but the average taxpayer may not believe that’s a plus for The Won.
What anomaly is that? It is never GM who is bungling things, it is the number that is lying. What a bunch of BS. The Volt is a loser and everyone knows it. Even massive tax credits can't move that turkey.
the lack of security in the tax form is by design.
the volt is a failure.
Mike Jackson was on CNBC this am and he was pushing ecconoboxes. The man is a clueless tool. he pushes tax hikes on gas, microcars because HE knows what the consumer should want.
IOW gimicks forced upon the people via regulation mean money for him. Not a good product, but crony capitalism.
And Mario Mendoza's batting average was an anomaly in the major leagues.
I believe you're right about the Volt. For the foreseeable future I think it'll be a car for the well healed enviro crowd as a status symbol.
If they lose money on every Volt they make, maybe they can’t make it up in volume, even considering cost scaling; hence the “shortage”. So, they make barely enough to “look good” and keep Obama happy, but not too many.
Basically, this is a halo car.
Got to keep those Chevy dealers open or you can’t sell cars and keep those Democrat, er, I mean union, workers employed at the factories so they can keep laundering, er, I mean donating, money to the Democrat party.
OMG! How can you say that? It was picked by those car mags as the car of the year. Not to mention, it didn’t work the first two times it was pulled out.
Hey, if the _resident says good things about it, it has to be good, right?
“Sticks and stones...” More articles today confirming it’s happening. The Times piece that I referenced and provided link for actually had a dealership admit they sent two employees “posing” as customers to buy Volts in their names, take tax credits, and then sell to dealership. This would be tax fraud since tax credit is not supposed to allow for intent of resale by consumers.
On a brighter note, dealers that thought they were going to make out are getting screwed as Volt demand is less than it is hyped to be. The KIA dealer mentioned in original article that has four Volts for sale has not been able to sell them for the past three months. They just lowered asking price by $10,000 each. Karma!
Smart automobile purchasers like your dad gave meaning to the words "quality control" which the American auto industry had rarely put into use or even heard of at that time.
It took Detroit about 30 years to wise up to the fact that European and Japanese made vehicles were build to higher standards and the American public was buying imports in huge numbers.
Now 0bama's Government Motors wants to mandate that Americans buy vehicles very similar in quality and value to the new 1968 Chevy I bought. It was my first green vehicle. 7 or 8 trips back to the local GM service department for final assembly and for their mechanics to do the best they could with the clean air junk that was attached to the engine.
I was younger and dumber in those days. Today I would not touch a Volt with a 30 foot pole unless you put a gun to my head.
Your dad was wise.
0bama ... failure, except to his UAW owners.
I hear you and thanks for your post.
That is a good piece by Mary Chapman in the Times, I was surprised when reading it. Shining some light on this like you have may tend to make some of these people think twice about the fraud angle.
Sounds like the KIA dealer decided he made a big mistake and wants out, the bad publicity may just be hurting his other sales. :-)
Ah air cooled engines!
They rarely failed, but if they did am I right or wrong that a good mechanic could slap in a new engine in the rear in something like 2 or 3 hours or less?
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