Volt Sales Targets: Disappointment and Triumph

Missed Targets

General Motors is being repeatedly beat up about missing sales targets set for the Volt. They said they'd sell 10,000 in 2011 with a limited release of the Volt in select states across the nation. They sold about 7,500. They said they would sell 40,000-45,000 in 2012 once the car was rolled out nationwide, and it looks like they are going to sell about 25,000 through December. Without putting this into perspective, and following the Volt's tumultuous and short life thus far, it would be easy to label the Volt as a failure.

However, this is a new market. When it comes down to it, GM is attempting to sell a type of car that has never been sold before. It was difficult to gauge how well the public would initially take to liking the Volt. Would they be able to see past the initial higher purchase price to recognize the vastly cheaper operating costs as it compares to the total cost of ownership comparisons to gas vehicles? Would they put concerns about the battery behind them with a generous warranty that shields the consumer from any issues for a long time? Would gas prices remain high in order to make an alternatively fueled vehicle attractive? Would dealers embrace the car and promote it, or would they shun it in favor of more traditional vehicles?

I think those issues alone should have been enough to make General Motors give more conservative sales estimates. But they didn't. They put out bold numbers. Not being an automobile insider, I suspect there are good reasons for high sales estimates that go beyond the obvious. I suspect car companies need to negotiate good prices from suppliers based on volume estimates. A lower estimate is likely going to mean a higher price per unit. This is completely speculation on my part, but otherwise I don't understand why such high targets were placed on such a fledgling product.

Things get worse.

Then the unthinkable happened. In late 2011, widely publicized and congressional involvement in a NHTSA Volt safety investigation would stoke fears in potential buyers. A Volt caught fire at a test facility 3 weeks after a side impact test. NHTSA eventually concluded that the Volt was as safe as or safer than most cars on the road, and General Motors made a modification to further reduce the likelihood of a battery fire in the event of a serious accident. But the damage was done. The Volt had become a political lightening rod. The conservative media was hailing the 'combustible Volt' as an example of wasted government tax dollars in the wake of the General Motors bail-out.

Up until that point, the Volt sales looked to be on an upward pace near of the end of 2011 with consecutive sales increases, culminating with a sales record of 1,529 in December. But the NHTSA hearings, and enormous amount of negative press, mostly unfair and speculative, took its toll.

Enter 2012.

Volt numbers in January plummeted to just 603 vehicles sold. February wasn't much better with sales rising to 1,023. At this rate, GM would struggle to pass the 10k mark on the second full year of production. Then General Motors announced that the plant would suspend production of the Volt for 5 weeks, starting in the middle of March. Vultures were circling. Pundits were calling this the end of the Volt. Owners and advocates were desperately trying to explain the sales drops, stating that the media had been so unfair and harsh during the NHTSA trials, that people weren't willing to trust the Volt as a result. General Motors publically abandoned its sales targets for the Volt, simply stating they would match supply with demand. It was indeed, grim.

Early Spring.

Then something happened. In a rush to bring the Volt to the market, General Motors had underestimated the importance of producing the Volt to meet California emissions standards. The nation's largest car market was selling an alternatively fueled vehicle that did not qualify for the states' $1500 additional tax credit, nor did it qualify for single occupancy HOV lane access. The Nissan Leaf did. The Toyota Prius during its early years did as well. GM had missed a critical component to jump start sales. Back in January, GM had announced its intention to deliver California emissions compliant Volts by March. In the midst of the plant shutdown, rumors started to pop up. New Volt records? Could it be possible? How was this possible? The HOV compliant California Volts were produced before the shutdown, and were being delivered to dealerships. There was a line out the door to get them. Then we got the March sales numbers: 2,289 domestic units sold. The press was in a frenzy.  The Volt had a pulse! As a result of this unexpected jump in sales, General Motors decided to restart production a week early. Volt advocates sighed with tentative relief that perhaps the worst was over.  In April, it was reported by the Detroit Press that the CEO of GM, Dan Akerson stated that he expected sales of the Volt to be averaging around 2,000 to 3,000 a month by the end of the year, and that should be enough to silence critics.  Once again, GM had created a target for the media.

Fast forward.

It has now been 6 months since the Volt seemed to turn the sales corner. After the March spike, Volt sales retreated below 2,000 and began an unbroken series of consecutive month over month sales increases. The Volt market is in a period of sustained growth. It would take until August for the Volt to break through the March sales record, but in August and September sales were 2,832 and 2,851 respectfully. All indications show another month around or above the 3,000 unit sales for October.  Finally, a sales target that was met!

The anti Volt pundits will just look at the total. They'll say, the Volt has only sold 16,348 cars through September, well short of making the 40,000-45,000 initial goal of General Motors. While that is true, it isn't being fair to the facts or obvious trend for anyone closely following the car. The Volt will likely end October with 3 consecutive months of around 3,000 units. This will annualize out to about 36,000 cars a year. So, while General Motors has taken a little longer than expected to get there, they are likely to meet or exceed the 40,000 a year mark in 2013 given current trends.

The Volt is a late bloomer. The electric vehicle market as a whole is going to be a late bloomer. We aren't going to have 500,000 electric vehicles on the road in the U.S. by 2015, let alone a million. That doesn't mean that electric cars are a failure just because they may not have come out of the gates as strong as the government and some companies had hoped for. But given a little perspective, I think you'll see that the steady and improving adoption of the Volt and its competitors is a trend worth betting on.

 

Quarterly Sales Rates:
January -> March: 1,305 a month or 15,660 a year
April -> June: 1,634 a month or 19,608 a year
July -> September: 2,511 a month or 30,132 a year
* October -> December: 3,100 a month or 37,200 a year

* estimates based on generalized upward trend seen through previous quarters