President Obama’s car manufacturing company

Published on Sep 3, 2012 by

Obama is citing his bailout of General Motors as proof that other industries should receive bailouts. Is Obama adopting the central planning principles of Joseph Stalin? Find out as Terry Jones of IBD and Doug Altner of the Ayn Rand Center discuss industrial policy and Obama’s plans for American industry.

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The federal government needs to get out of the way it seems when it comes to making cars. No one can do any worse in my view.

While I often complain about government waste and stupidity, I’m not even sure what to say about this grim bit of news from Reuters.

General Motors Co sold a record number of Chevrolet Volt sedans in August — but that probably isn’t a good thing for the automaker’s bottom line. Nearly two years after the introduction of the path-breaking plug-in hybrid, GM is still losing as much as $49,000 on each Volt it builds, according to estimates provided to Reuters by industry analysts and manufacturing experts. Cheap Volt lease offers meant to drive more customers to Chevy showrooms this summer may have pushed that loss even higher. There are some Americans paying just $5,050 to drive around for two years in a vehicle that cost as much as $89,000 to produce. …The weak sales are forcing GM to idle the Detroit-Hamtramck assembly plant that makes the Chevrolet Volt for four weeks from September 17, according to plant suppliers and union sources. It is the second time GM has had to call a Volt production halt this year. GM acknowledges the Volt continues to lose money, and suggests it might not reach break even until the next-generation model is launched in about three years.

Gee, it’s almost as if everything that critics have said all along is right.

But not to worry, taxpayers are underwriting the costs. So if bigger subsidies are the price of buying support from the UAW and allowing fat-cat incompetent managers to stay on the job, that just means a bigger tab to pay for the rest of us.

How comforting.

P.S. If you’re a taxpayer and need to be cheered up, these cartoons may help.

P.P.S. This spoof video on the Volt may be even funnier.

P.P.P.S. Last but not least, Government Motors plans to build on the success of the Volt with the Obummer. It was due in 2011, but standard government incompetence has pushed back the release date.

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Comments

  • Ed Darrell  On October 1, 2012 at 12:51 pm

    It would help if you’d try to keep up. Even Forbes magazine said your claim is a hoax: http://www.forbes.com/sites/boblutz/2012/09/10/the-real-story-on-gms-volt-costs/

    • Everette Hatcher III  On October 1, 2012 at 3:05 pm

      Reuters reported, “The lack of interest in the car has prevented GM from coming close to its early, optimistic sales projections. Discounted leases as low as $199 a month helped propel Volt sales in August to 2,831, pushing year-to-date sales to 13,500, well below the 40,000 cars that GM originally had hoped to sell in 2012.”

      The key to getting the cost down is meating sales projections. As long as sales lag there is no chance that the costs will come down.

      • Ed Darrell  On October 1, 2012 at 3:15 pm

        Regardless whether sales projections are met, it’s erroneous to claim a loss of $40,000 or so on each Volt sold. Sales aren’t so good as some would like. So what?

        As the financial and accounting guys note, to claim now that GM is losing money an each Volt based on total committed to the program is like saying Apple screwed up with it’s new iPhone, losing nearly $4,000 on each one.

        I think there is more of a problem with your polemical accounting method than there is with the sales of the Volt.

  • AC Points  On October 1, 2012 at 6:10 pm

    At the end of 2010 they were “losing” $3.7 million per Volt.

    At the end of 2011 they were “losing” $133,000 per Volt.

    At present they are “losing” $40,000 per Volt (Note Reuters only counted Volts sold in North America for some reason in their calculation to come up with $49,000.)

    Back in the late 90’s people were talking about how Toyota was losing $100,000 on every Prius. It took Toyota 4 years just to break even on their operational costs, before even beginning to recoup development costs. Over the long haul, the Prius has become successful.

    The CBO’s recent report says that even with the subsidies EV’s and plug ins don’t make economic sense, but between social/political buyers, techno geeks, and early adopters it seems possible that the Volt will break even. Its hard to see it as a big success, however. If/when the Europe economy recovers, the gas prices there seem more likely to make the Volt a viable economic choice than in North America. So, that may be the long term savior of the Volt program, assuming the economy there comes back soon enough.

    It would be interesting to see how much Toyota spent developing their EV which they have now decided not to bring to market at all. The cost per vehicle sold for that car will definitely be in the millions.

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