Chevy Volt Inventory Build – Time for Another Production Halt?

A recent search for new Chevy Volts on unearthed 9,254 vehicles currently at dealerships for sale. There were another 258 late-model, used Volts available. About half of those had less than 5,000 miles on them. Considering the abysmal sales rate for the self-proclaimed electric wonder-car (1,306 in April for those keeping track), the unofficial inventory numbers point to about a seven month supply of Volts available. Ideal inventory levels are considered to be in the two month range. It may be near time for General Motors to halt production, yet again, for the floundering Volt.

The inventory numbers for the Volt seem to be at all-time highs at a time when sales have shown no signs of revival. Barring a manipulation of demand, which GM has managed in the past by offering low-payment, subsidized leases through government-owned Ally Financial, it does not make any sense for Volts to continue to be manufactured faster than they are being purchased. Another option is for crony company GE to step up to the plate and take a load of Volts off of GM’s hands. Or maybe the Obama Administration can find a way to use some more taxpayer money to support a car that can not survive on its own in the free markets. It does not appear that the $7,500 federal tax credit is enough to motivate wealthy consumers to flock to dealerships to buy the cars.

GM has used excuses for the shutdowns in the past when it halted Volt production. The primary reason for factory shutdowns has been that the plant needed retooling. GM then went on to proclaim something to the effect of, “Great news, demand for the Volt is so strong we’re restarting production sooner than we thought we would!” I guess these statements are designed to fool the same people that actually believed that low Volt sales were a result of GM not being able to build the cars fast enough to keep up with all that darn demand. That lame excuse has now been replaced with a flat-out denial that there is anything wrong with Volt sales. The car is doing very well, thank you.

The Chevy Volt has been a glaring example of why political ideology and government interventionism have no place in free-market capitalism. Time and again we see failures of government-supported companies, particularly in the green arena, with corporations like Solyndra and Fisker relying on government handouts instead of having a viable business plan. In the case of the Volt, GM refuses to admit its mistake. Instead, it fabricates reasons for low sales or goes a step further and tries to manufacture demand where little exists. Until such time that GM makes its business decisions based upon economic and market realities rather than upon its politically correct green vision for the future, more taxpayer money is sure to be thrown away to keep the Volt hoax alive. I expect that we’ll see more Volt plant retooling soon.

Mark Modica is an NLPC Associate Fellow.