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Raz Godelnik headshot

3 Thoughts for GM While It Halts Chevy Volt Production (Again)

August was an all-time record month for the Chevy Volt. We don’t have the final tally yet, but GM said the company expects the Volt's August sales, which includes both 2012 and 2013 models, to top 2,500, a 35 percent increase over July sales. Yet, apparently the sales of the Volt are still not strong enough and GM will close the Detroit-Hamtramck assembly plant, where the Volt is made, for four weeks, from September 17 through October 15.

GM, according to Detroit Free Press, disputed reports that the plant shut-down is connected to disappointing sales and explained it needs to upgrade equipment for the forthcoming production of the 2014 Chevrolet Impala. At the same time, William Grotz, a GM spokesman told Bloomberg that “it’s just a matter of matching supply with demand and gearing up for the production of the Chevy Impala.”

This is the second time this year GM has closed this plant temporarily. In March, GM halted the production of the Volt for four weeks and laid off 1,300 workers due to sluggish sales. As we wrote here GM needed not just to match supply to demand, but also to recalibrate its Volt strategy, and while sales have significantly improved since then, the fact that the plant is going to be closed again is an indication that GM still has some work to do. So while the manufacturing line workers will be at home, it might be worthwhile for GM’s executives to consider the following points:

1. It is time to be realistic about sales – as we mentioned last March, it looks like the company had a difficult time acknowledging reality. GM CEO Dan Akerson said last December that, “We want to ramp Volt production to roughly 60,000 in 2012.” Three quarters of those were intended for sale in the U.S. This forecast seemed a bit ambitious at the time, given that the company sold only 7,671 Volts in 2011 (short of its original goal of 10,000 cars). One would assume that after March’s shutdown and layoffs, GM would be more careful with its forecasts and adjust manufacturing to actual sales, but apparently this is not the case. Akerson, according to Bloomberg, said in June that sales would probably total 35,000 to 40,000.

Given that GM sold 10,666 Volts in the first seven months of the year that estimate seems very high. Even if monthly sales increase to 3,000 for every month until the end of the year, GM wouldn’t sell more than 25,000 cars in 2012. So it looks like Akerson is once again aiming too high, and it’s really not clear why. Lofty estimate don't serve the company as they only highlight the missed targets. Maybe it's time for GM to be realistic about the real market acceptance of the Volt before halting the Volt’s manufacturing line for couple of weeks becomes a common practice.

2. Think long-term, not short-term – the Volt is and will be measured by potential buyers in terms of cost-benefit. At the moment it seems GM is more involved in short-term efforts to reduce costs, offering dealers, according to CNNMoney, the best incentives it has ever had on the model. These efforts can benefit the company to some degree (more sales, less income), but if GM wants to build the Volt for the long-term it might want to focus on providing further benefits that will enhance the Volt’s value and justify its price.

For example, in California, where about a third of the Volts are sold, last February the state gave an approval for Volt drivers to use HOV (high occupancy vehicle) lanes on its highways, even if they drive alone. This tremendously popular benefit saves drivers time in addition to money. California has a history of extending such benefits to clean cars - when a limited number were offered to hybrid drivers, more than the going rate for the same car sans sticker. Carpool lane rights made a difference for Californians and they might have the same impact in other states as well, so shouldn’t GM be spending its time and money on these sorts of long-term benefits rather than short-term discounts?

3. Embrace the political debate, don’t ignore it – as we mentioned last March, GM and the Volt specifically became part of the political debate, with positive references from Democrats (President Obama promised to buy a Chevy Volt) and negative ones from Republicans (remember Gingrich’s statement that “you cannot put a gun rack in a Volt”?). The politicization of the Volt hasn’t stopped since then - last June Louisiana Governor Bobby Jindal said, while talking about Obamacare that, “it really raises the question of what’s next, what’s allowable. Taxes on people who refuse to eat tofu or refuse to drive a Chevy Volt…”

GM decided it wants to distance itself from the politization of its brands and banned all candidates from visiting any of its plants until after the Election Day. On one hand it makes sense as GM doesn’t want the Volt to become a Democrat’s car. On the other hand, it’s not like that after the elections conservatives will stop associate the Volt with Obama and big government spending, right? So why not use politics to move sales instead of shying away from them? If GM found a humorous way to use politics in a Volt’s marketing campaign, it could transform the debate from a risk to an opportunity.

Raz Godelnik is the co-founder of Eco-Libris, a green company working to green up the book industry in the digital age. He is an adjunct faculty at the University of Delaware’s Business School, CUNY SPS and the New School, teaching courses in green business, sustainable design and new product development.

Raz Godelnik headshotRaz Godelnik

Raz Godelnik is an Assistant Professor and the Co-Director of the MS in Strategic Design & Management program at Parsons School of Design in New York. Currently, his research projects focus on the impact of the sharing economy on traditional business, the sharing economy and cities’ resilience, the future of design thinking, and the integration of sustainability into Millennials’ lifestyles. Raz is the co-founder of two green startups – Hemper Jeans and Eco-Libris and holds an MBA from Tel Aviv University.

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