Give the People What They (Don't) Want

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Published January 26, 2012

| FOXBusiness

What is the payoff to General Motors (GM) for sticking with its electric Volt? 

We recently had a meeting with some GM executives who swore to us  that the government has never tried to influence the company on the Volt. But even if that's true, why would a company interested in giving customers exactly what they want double down on a product that customers don't want?

GM sold only 7,600 Volts last year, a lot less than what it had planned. And a lot of the Volts that have been sold were bought by the government, so that’s a zero sum game. Moreover, Chevy dealers are now turning down Volts that GM wants to ship to them.  

Last month, GM allocated 104 Volts to 14 dealers in the New York area. Dealers took just 31 of them, the lowest "take rate" for any Chevy model. So neither dealers nor customers want the Volt.

You might think that a company coming out of bankruptcy would want to reconsider pushing something that nobody wants. But GM is fully committed to continuing with the Volt line. Why?

Call us conspiratorial, but we still think there's a government connection.

Just look at the way the Chevy Volt just skirted a fight with regulators over its battery fires. U.S.  federal safety inspectors decided to drop the investigation of the battery fires that Volts experienced after some heavy duty government testing. Now, we think it's a good thing that the government regulators backed off. But when was the last time this administration backed off of any regulatory fight? 

If this had been any other car company or even any other car model, would the super regulators at the traffic safety administration have backed off? We doubt it. 

Favoritism? Absolutely!

The point is, there is no payoff to the Volt unless you realize that the government -- which is still the biggest single owner of GM -- is going to do everything possible to help the Volt line continue. Even if there is no final payoff in the marketplace.

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http://www.foxbusiness.com/industries/2012/01/26/give-people-what-dont-want/