General Motors reported that Chevy Volt sales for May came in at a paltry 1,680. To put this in perspective, GM sold 29,579 Chevy Malibus during the month. The funny thing is, I do not recall seeing as many TV ads for the Malibu as I have for the Volt. While GM’s ad strategy (which has seen the company discontinuing advertising on Facebook and the Super Bowl) has received much attention, auto journalists and analysts do not seem to want to question the reason why GM is spending such a disproportionate amount of money advertising a vehicle that is losing money for the company and its shareholders.
GM did not think that spending $10 million annually on Facebook was leading to enough additional sales to justify the expense. Based on the amount of ads I see on the Volt, I would guess that the company is spending at least that much per month on advertising for the Volt. The ad cost per Volt sold must be in the thousands of dollars. Why is GM continuing to be so free with marketing dollars for the Volt as it makes a commitment to improve efficiency of its advertising budget and why isn’t anyone questioning the move?
The decision by GM to continue to hype the Volt despite the low demand can not be based on economics. I am aware that Volt owners seem to love their cars, good for them. But let’s face it, the car did not live up to the hype and sales rates are no where near enough to meet GM’s goal of selling 45,000 this year in the US. The fact remains that the Volt is representative of the Obama Administration’s commitment to green energy initiatives that have cost taxpayers billions of dollars. Shareholders of GM deserve to know if the company has its priorities straight as share price continues to suffer and the company appears to have political motivations by focusing on a “green” vehicle that is costing both taxpayers and shareholders money.
GM continues to function as Government Motors with odd priorities and shady deals that seem to award cronies like CFO Dan Amman’s wife at advertising agency, Mother New York. Shareholders should be concerned that GM seems to have an agenda that does not place profits ahead of politics. And the continuing dismal sales of the Chevy Volt warrant congressional debate regarding the wasteful spending of taxpayer dollars to promote vehicles and technologies that the majority of Americans do not seem to want or can not afford. The Chevy Volt, not unlike the Obama green energy initiatives, is more and more appearing to be a misguided and costly idea. Neither is helping with the country’s economic, environmental, or energy issues.
Mark Modica is an NLPC Associate Fellow.