When Nobody Wants To Buy The Best Car Of The Year

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When Nobody Wants To Buy The Best Car Of The Year
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DETROIT, MI - JANUARY 10: In this handout ima...

The Chevrolet Volt and its European sister, the Opel Ampera, were selected Monday as European Car of the Year by a panel of 59 judges from 23 European nations. The Volt/Ampera outscored the new Volkswagen Up and the redesigned Ford Focus on attributes such as design, comfort, performance, innovative technology and efficiency. It was the latest in a string of awards for General Motors' plug-in hybrid, which was also voted World Green Car of the Year and North American Car of the Year in 2011.

The European award, announced at the Geneva Motor Show, was oddly juxtaposed with last Friday's news that GM is temporarily suspending production of the Volt because of slow sales. Volt inventories have ballooned to 154 days' supply, whereas an inventory of 60 days is considered ideal.

Critics quickly jumped on that news as evidence that the Volt is a wasteful folly and the federal government shouldn't be meddling in the auto industry. Never mind that the Volt was conceived long before GM's 2009 taxpayer-financed bankruptcy. As investors with a 32% stake in the world's largest carmaker, taxpayers ought to be pleased by GM's uncharacteristic discipline in matching its vehicle production to real demand. Instead of overproducing Volts, and then heavily discounting them to get people to buy, GM is protecting its investment.

But there's a real problem when the best new car on the market (in the estimation of journalists who write about the car industry, anyway) is not popular with consumers. And that goes to a bigger issue that will affect Ford Motor, Toyota Motor and others rushing to bring out plug-in cars in the next 12 months or so: there is no market for EVs. At least not yet.

GM had expected to sell about 10,000 Volts in 2011, its first full year on the market. Instead, it sold 7,600. It recently backed off a target of 45,000 for 2012, after selling 603 in January and 1,023 in February. Still, the Volt outsold two other EVs on the market: the Nissan Leaf (478 in February) and the Mitsuibishi i (44). Traditional hybrids, on the other hand, did OK, with about 36,000 sold in February, or 3 percent of all cars sold in the U.S. About three-quarters of them were Toyota Priuses.

The Volt's hefty pricetag, $41,000, no doubt scared away some buyers. Even with a $7,500 federal tax credit, it's a lot to pay for a four-seat Chevrolet. The lease price isn't bad at all -- $350 a month, with $2,500 down -- but consumers have somehow missed that marketing pitch, and that's GM's fault.There have been other issues, too: a government investigation into post-crash test fires (much ado about nothing) and the challenge of making people understand the Volt's unique gas-and-electric technology.

The Volt is a range-extended electric car. It runs solely on electricity for the first 25 to 50 miles, but has a backup gasoline-powered motor that recharges the battery, enabling a total range of about 350 miles. It's a technological wonder, and a testament to American innovation.

But thanks to improvements in gasoline-powered internal combustion engines, there are plenty of other cars in dealer showrooms that can deliver 35 or 40 miles per gallon for a much lower price. The Chevy Cruze, which shares an engineering platform with the Volt, is a perfect example. Its turbocharged 1.4-liter Ecotec engine has a cruising range of more than 500 miles and gets 26 mpg city and 38 mpg highway. The Cruze sells for $17,000 to $24,000.

Gas prices are rising, though. The current average for a gallon of regular gas is $3.77, according to AAA, and many people are already paying more than $4 to fill up. Gas prices peaked in 2008 at $4.14 per gallon. Back then, auto industry executives said consumer behavior changed when prices topped $3.50 per gallon. I wonder what's the tipping point for EVs -- $5 a gallon? $6? Share your thoughts.

 

 

 

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