posted September 10, 2012 11:19 AM            

This pile of crap sells for about $40,000..base price and costs GM up to $89,000 per Volt to produce.

Marxist math's finest hour!

Fortunately for GM, almost no one wants an O'BomberMobile.

Insight: GM's Volt: The ugly math of low sales, high costs
Estimating costs of making General Motors' Volt
Bernie Woodall and Paul Lienert and Ben Klayman

(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.

And while the loss per vehicle will shrink as more are built and sold, GM is still years away from making money on the Volt, which will soon face new competitors from Ford, Honda and others.

GM's basic problem is that "the Volt is over-engineered and over-priced," said Dennis Virag, president of the Michigan-based Automotive Consulting Group.

And in a sign that there may be a wider market problem, Nissan, Honda and Mitsubishi have been struggling to sell their electric and hybrid vehicles, though Toyota's Prius models have been in increasing demand.

GM's quandary is how to increase sales volume so that it can spread its estimated $1.2-billion investment in the Volt over more vehicles while reducing manufacturing and component costs - which will be difficult to bring down until sales increase.

But the Volt's steep $39,995 base price and its complex technology — the car uses expensive lithium-polymer batteries, sophisticated electronics and an electric motor combined with a gasoline engine — have kept many prospective buyers away from Chevy showrooms.

Some are put off by the technical challenges of ownership, mainly related to charging the battery. Plug-in hybrids such as the Volt still take hours to fully charge the batteries - a process that can be speeded up a bit with the installation of a $2,000 commercial-grade charger in the garage.

PLANT SHUTDOWN

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.

Out in the trenches, even the cheap leases haven't always been effective.

A Chevrolet dealership that is part of an auto dealer group in Toms River, New Jersey, has sold only one Volt in the last year, said its president Adam Kraushaar. The dealership sells 90 to 100 Chevrolets a month.

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.

"It's true, we're not making money yet" on the Volt, said Doug Parks, GM's vice president of global product programs and the former Volt development chief, in an interview. The car "eventually will make money. As the volume comes up and we get into the Gen 2 car, we're going to turn (the losses) around," Parks said.

"I don't see how General Motors will ever get its money back on that vehicle," countered Sandy Munro, president of Michigan-based Munro & Associates, which performs detailed tear-down analyses of vehicles and components for global manufacturers and the U.S. government.

It currently costs GM "at least" $75,000 to build the Volt, including development costs, Munro said. That's nearly twice the base price of the Volt before a $7,500 federal tax credit provided as part of President Barack Obama's green energy policy.

Other estimates range from $76,000 to $88,000, according to four industry consultants contacted by Reuters. The consultants' companies all have performed work for GM and are familiar with the Volt's development and production. They requested anonymity because of the sensitive nature of their auto industry ties.

Parks declined to comment on specific costs related to the Volt.

The independent cost estimates obtained by Reuters factor in GM's initial investment in development of the Volt and its key components, as well as new tooling for battery, stamping, assembly and supplier plants — a price tag that totals "a little over" $1 billion, Parks said. Independent estimates put it at $1.2 billion, a figure that does not include sales, marketing and related corporate costs.

Spread out over the 21,500 Volts that GM has sold since the car's introduction in December 2010, the development and tooling costs average just under $56,000 per car. That figure will, of course, come down as more Volts are sold.

The actual cost to build the Volt is estimated to be an additional $20,000 to $32,000 per vehicle, according to Munro and the other industry consultants.

The production cost estimates are considerably higher than those for the Chevrolet Cruze, the Volt's conventional gasoline-engine sister car, which Munro estimates at $12,000 to $15,000 per vehicle.

Production costs typically include such items as parts, material, labor and the cost to run the factory, according to manufacturing expert Ron Harbour, who heads the North American Automotive Practice at Michigan-based consultant Oliver Wyman.

COST PENALTIES

The Volt costs more to build for several reasons, mostly related to the car's richer content, complex technology and still-low sales and production volumes.

The basic model has a higher level of equipment and features than the Cruze, which is assembled in Lordstown, Ohio, and has a starting sales price of $17,925. The Volt also has a number of unique parts, including the battery pack, the electric motor and the power electronics.

Some of GM's suppliers also impose cost penalties on the automaker because the Volt's production volume remains well below projections.

Still, as the company wrestles with how to drive down costs and increase showroom traffic, Parks said the Volt is an important car for GM in other respects.

"It wasn't conceived as a way to make tons of money," he said. "It was a big dip in the technology pool for GM. We've learned a boatload of stuff that we're deploying on other models," Parks said. Those include the Cruze and such future cars as the 2014 Cadillac ELR hybrid.

The same risky strategy — gambling on relatively untested technology — drove massive investments by Toyota Motor Corp in the Prius hybrid and Nissan Motor Co in the Leaf electric car.

Toyota said it now makes a profit on the Prius, which was introduced in the United States in 2000 and is now in its third generation. Sales of the Prius hybrid, which comes in four different versions priced as low as $19,745, have almost doubled so far this year to 164,408.

Other such vehicles haven't done nearly as well. Nissan's pure-electric Leaf, which debuted at the same time as the Volt and retails for $36,050, has sold just 4,228 this year, while the Honda Insight, which has the lowest starting price of any hybrid in the U.S. at $19,290, has sales this year of only 4,801. The Mitsubishi i, an even smaller electric car priced from $29,975, is in even worse shape, with only 403 sales.

Toyota's unveiling of the original Prius caught U.S. automakers off guard. GM, then under the leadership of Rick Wagoner and Bob Lutz, decided it needed a "leapfrog" product to tackle Toyota and unveiled the Volt concept to considerable fanfare at the 2007 Detroit auto show.

The car entered production in the fall of 2010 as the first U.S. gasoline-electric hybrid that could be recharged by plugging the car into any electrical outlet. The Obama administration, which engineered a $50-billion taxpayer rescue of GM from bankruptcy in 2009 and has provided more than $5 billion in subsidies for green-car development, praised the Volt as an example of the country's commitment to building more fuel-efficient cars.

NEXT-GENERATION CAR

GM's investment in the Volt has so far been a fraction of the $5 billion that Nissan said it is spending to develop and tool global production of the Leaf and its associated technologies and the reported $10 billion or more that Toyota has plowed into the Prius and various derivatives over the past decade.

But there will inevitably be more development costs for future generations of GM plug-ins and it could still could be years before GM sells enough Volts to bring the cost down to break even.

The average per-car costs for development and tooling will drop as sales volume rises. But GM will need to sell 120,000 Volts before the per-vehicle cost reaches $10,000 — and that may not occur during the projected five-year life cycle of the first-generation Volt.

Parks said the company also is continuously reducing production costs on the current Volt and its successor. "There is a strong push on the cost of the Gen 2 to get the car to make money and to be more affordable . . . Virtually every component in the next-gen car is going to be cheaper," he said.

One obvious way to pull down costs is to push up volume — but GM is paying a hefty price to do so.

The automaker just ended a special Volt lease program that offered customers a low monthly payment of $279 a month for two years, with some high-volume dealers dropping the payment to $199 a month after receiving incentive money from GM, with down payments as low as $250. The company said about two-thirds of Volt customers in July and August leased their vehicles, compared with about 40 percent earlier this year.

Before GM resorted to discounting Volt leases, sales were averaging just over 1,500 cars a month. A huge part of that reason was consumer push back over the price, according to Virag of Automotive Consulting.

Volt's nearest competitor, the Prius, is priced at $24,795, with a newer version, the Prius Plug-In, starting at $32,795.

Parks said the sales pitch for the Volt was "difficult" because of the sticker price and the car's technical complexity. But the discounted leases have helped lure more non-GM buyers into Chevy showrooms. Their number-one trade-in: Toyota Prius.

posted September 10, 2012 11:39 AM            

it worked. new things take awhile to catch on in this world where most people resist change.

posted September 10, 2012 01:07 PM            

Ummm, GM wouldn't be doing so..fine, fine, fine if they had to pay back all that money American taxpayers are on the hook for.

In fact, the very people who got royally screwed by O'Bomber in the GM deal were American taxpayers and GM's secured bond holders...oh and those non union pensioners and employees who lost their jobs and pensions, oh and those GM dealers...most of whom were Republicans who lost their GM dealership affiliations...because they were Republicans.

posted September 10, 2012 05:58 PM            

20,000 Delphi retirees lost their health insurance and pensions so O'Bomber could give the UAW about 37% of General Motors and appease his big labor union campaign contributors.

Nice, very nice.

Oh, but they were non-union so what the hell did O'Bomber care about them!

Non-unionized Delphi retirees rally over ‘theft of our pensions’ caused by auto bailout
09/10/2012
By Matthew Boyle

http://dailycaller.com/2012/09/10/non-unionized-delphi-retirees-rally-in-dayton-over-theft-of-our-pensions-caused-by-auto-bailout/

posted September 10, 2012 07:14 PM            

They were simply an unsaved casualty of the decline of GM. The administration didn't save every last bit of every vestige associated with GM.

Note at the bottom of the article containing the supposedly incriminating emails:

Note: This story was updated after publication to reflect that Delphi is an independent company and not controlled by General Motors.
http://dailycaller.com/2012/08/07/emails-geithner-treasury-drove-cutoff-of-non-union-delphi-workers-pensions/#ixzz266w5gRdG

I appreciate the attempt at good journalism. This may very well be a bit of political opportunism on the part of these former Delphi employees. I doubt very much that there is or will be any scandal associated with this. The same article I just posted from indicates that GM had a say in this matter as well:

“Feldman will then take it to GM and get their approval, which will either be a rubber stamp or one last chance to nick us on the deal,” Menke added.

Read more: http://dailycaller.com/2012/08/07/emails-geithner-treasury-drove-cutoff-of-non-union-delphi-workers-pensions/#ixzz266wrVJf4

posted September 10, 2012 10:03 PM            

O'Bomber has absolutely no authority whatsoever to intervene in judicial branch matters...of which bankruptcy court is a part.

He did intervene. Secured bond holders got cut out of their secured holdings, the UAW wound up with 37% of General Motors when they had no equitable stake in GM, the pension funds of non-union employees were stolen..... Need I go on with O'Bomber's lawlessness?

OK, I will then. O'Bomber's car czar went through the list of GM dealers and recinded the dealership franchises of mostly Republican dealers leaving them without their franchises but with their inventory of GM cars which GM refused to repurchase putting them effectively out of business but sitting on millions of dollars of future lease payment obligations or mortgage payments.

posted September 11, 2012 09:18 AM            

Yet, to hear this Marxist bozo campaign on the GM issue one would think O'Bomber is unaware of the $50 BILLION in taxpayer money pumped into GM before the bankruptcy...which is money down the toilet. Unaware he is unauthorized to intervene in judicial matters...like bankruptcy courts. Unaware he has no authority to change or set aside contracts. Unaware that just because he's prez, he still can't commit massive theft from up to 20,000 pensioners. Unaware he is not permitted to use his office of president to reward or punish citizens who agree OR disagree with him.

I don't know what the hell they're teaching at Harvard Law School these days but if this bozo represents the best legal education Harvard Law School has to offer, then it's time to shut that school down.

September 10, 2012 4:00 A.M.
The Democrats’ GM Fiction
By The Editors

The Democrats have decided to run in 2012 as the bailout party. It is an odd choice — the 2008–09 bailouts were deeply unpopular among the general public, and even their backers were notably conflicted about the precedent being set and the ensuing moral hazard. But Democrats have nonetheless made one of the most abusive episodes in the entire bailout era their economic cornerstone: the government takeover of General Motors.

The GM bailout was always an odd duck: The Troubled Asset Relief Program (TARP) was created in order to preserve liquidity in the financial markets by heading off the collapse of key financial institutions that had made catastrophically bad bets on real-estate securities — nothing at all to do with cars, really. GM’s financial arm, today known as Ally Financial, was in trouble, but GM’s fundamental problem was that its products were not profitable enough to support its work-force expenses. A single dominant factor — the United Auto Workers union’s extortionate contracts with GM — prevented the carmaker from either reducing its work-force costs or making its products more efficiently. And its hidebound management didn’t help.

Admirers of the GM bailout should bear in mind that it was the Bush administration that first decided to intervene at the firm, offering a bridge loan on the condition that it draw up a deeply revised business plan. President Obama’s unique contribution was effectively to nationalize the company, seeing to it that the federal government violated normal bankruptcy processes and legal precedent to protect the defective element at the heart of GM’s troubles: the financial interests of the UAW. It did this by strong-arming GM’s bondholders into taking haircuts in order to sweeten the pot for the UAW. The Obama administration also creatively construed tax law to relieve GM of tens of billions of dollars in obligations — at the same time that Barack Obama & Co. were caterwauling about the supposed lack of patriotism of firms that used legal means rather than political favoritism to reduce their tax bills.

Mitt Romney’s proposal for a structured bankruptcy would have necessitated considerable federal involvement, too, but with a key difference: The UAW contracts would have been renegotiated, and GM’s executive suites would have been cleaned out, placing the company on a path toward innovation and self-sufficiency rather than permanent life support. Which is to say, Obama did for GM what he is doing by un-reforming welfare: creating a dependent constituency.

The Democrats cling to the ridiculous claim that the bailout of GM and its now-Italian competitor, Chrysler, saved 1.5 million U.S. jobs. This preposterous figure is based on the assumption that if GM and Chrysler had gone into normal bankruptcy proceedings, the entire enterprise of automobile manufacturing in the United States would have collapsed — not only at GM and Chrysler but at Ford and foreign transplants such as Toyota and Honda. Not only that, the Democrats’ argument goes, but practically every parts maker, supplier, warehousing agency, and services firm dedicated to the car industry would have collapsed, too. In fact, it is unlikely that even GM or Chrysler would have stopped production during bankruptcy: The assembly lines would have continued rolling, interest and debt payments would have been cut, and — here’s the problem — union contracts would have been renegotiated. Far from having saved 1.5 million jobs, it is not clear that the GM bailout saved any — only that it preserved the UAW’s unsustainable arrangement. **Oh, but the UAW are O'Bomber's campaign contributor buds..so it's OK!**

Bill Clinton bizarrely tried to claim that the bailout has been responsible for the addition of 250,000 jobs to the automobile industry since the nadir of the financial crisis. Auto manufacturers and dealerships have indeed added about 236,000 jobs since then, but almost none are at GM, which has added only about 4,500 workers, a number not even close to offsetting the 63,000 workers that its dealerships had to let go when the terms of the bailout unilaterally shut them down.

Ugly as the bank bailouts were, the federal government appears set to make its money back on most of them, with the exception of some smaller regional banks and CIT. Even AIG, one of the worst of the financial basket cases, is set to end up being a break-even proposition for U.S. taxpayers. But tens of billions of dollars will be lost on GM. The federal government put up more for a 60 percent interest in the firm than GM is worth today.

At their convention, Democrats swore that GM is “thriving,” but the market doesn’t think so: GM shares have lost half their value since January 2011. And while the passing of the Great Recession has meant growing sales for all automakers, GM is seriously lagging behind its competitors: Its sales are up 10 percent, a fraction of the increases at Kia, Toyota, Volkswagen, and Porsche. With its sales weak, its share price crashing, and its business model still a mess, some analysts already are predicting that GM will return to bankruptcy — but not until after the election.

The Obama administration talks up all of the “jobs” it saved at GM — but jobs doing what? Manufacturing automobiles that are not competitive without a massive government subsidy? Propping up an economically unviable enterprise just long enough to get Barack Obama reelected? As much as it will pain the hardworking men and women of GM to hear it, it is not worthwhile to save jobs at enterprises that cannot compete on their own merits. So long as the federal government is massively subsidizing the operation, a job at GM is a welfare program with a fairly robust work requirement. (And we all know how the Obama administration feels about work requirements.)

We have bankruptcy laws and bankruptcy courts for a reason. It may make sense to expedite the proceedings for very large firms such as GM in order to prevent disruptions in the supply chain that would, as Ford’s executives argued, harm other, healthier firms. But bankrupt is what GM was, and bankrupt is what GM is, a fact that will become blisteringly apparent should the government ever attempt to sell off the shares it owns in the company. ***Yeah, just wait until prospective buyers of GM finds out the UAW..their future partners in GM owns 37% of GM. Good luck selling GM to any business types with 2 braincells to call their own.

posted September 22, 2012 08:55 AM            

Neither GM or Chrysler would have shut their doors a day in a managed bankruptcy as any fool could tell the Marxist Messiah and his ship of fools in the White House and his campaign.

But the lie is even worse. O'Bomber's lie assumes every auto company making cars in the US would have gone t!ts up...were it not for him.

There is no lie too big that the Marxist Messiah won't tell it, that the Marxist chorus in the drooling press won't spread it and that the usual suspects and O'Bomber Kool-Aid swillers won't swallow it and beg for more.

And now, American taxpayers are stuck with an asset...GM shares worth less than half of what taxpayers need just to break even.

Wow, thanks O'Bomber. That Marxist Math crap really works!

Why lie about GM? Because the truth is rotten

The narrative that President Barack Obama offers up about his “rescue” of the U.S. automobile industry is tidy, upbeat and built on an utter lie.

His campaign has repeatedly claimed that the odd, modified bankruptcy that his administration arranged with General Motors and Chrysler saved 1.5 million jobs. This is based on the bizarre argument that without it all automobile manufacturing in the U.S. would have gone away. How and why exactly would Ford’s, Toyota’s and Honda’s U.S. plants have disappeared if GM and Chrysler had undergone a regular bankruptcy?

Democrats have also repeatedly claimed GM will end up repaying the federal government for all the help it got in recent years. Really? The taxpayers who provided $26.4 billion in direct, as-yet-unrepaid funds to GM have as collateral 500 million shares of GM stock. To break even, GM’s stock price needs to be about $53. At Thursday’s close of trading, it was $23.53, meaning the value of taxpayers’ GM stock is $11.8 billion, $14.6 billion short of what taxpayers are owed. Over the past two years, the Dow Jones is up 20 percent and GM is down 31 percent. Be scared, taxpayers. Very scared.

posted September 22, 2012 09:22 AM            

I feel like I am going crazy when I see people support this idiot who is destroying them but they are too stupid to see.

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Passion, Lust, Desire. Check out my journal

posted September 22, 2012 09:54 AM            

quote:

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Originally posted by jwhop:
But Ami, if O'Bomber's supporters didn't like being kept in the dark and being fed a steady diet of horseshiiit, they couldn't be part of his "Mushroom Brigade"!

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I know. People are likened to sheep in the Bible. It is very hard to be an independent thinker, as it goes against our natural grain, which is to belong, at all costs. That is why I appreciate you, Jwhop. I appreciate Randall, Ian and the few other independent thinkers I know.

It is not easy to think for oneself, as one must trust oneself. After that, one must stand alone, often. One must be willing to stand alone, anyway.

That is a very hard and scary space.

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Passion, Lust, Desire. Check out my journal

posted September 23, 2012 12:16 PM            

but even if you were right, the 26 billion is a drop in the bucket when compared with the subsidies to big oil, big agri, big businesses in general. the subsidies to those would have paid for the veterans' jobs bill that was just killed in the house...

but my point was not to bring up the past but the general reaction of the masses to anything new. if we continue to refuse to move forward into a cleaner way of life, we will perish long before the earth does.

posted September 24, 2012 03:45 PM            

GM would not have lost a day of production with a managed bankruptcy. In fact, GM went through a managed bankruptcy...only with O'Bomber interfering with the authority of the bankruptcy court and stealing the pensions and pension funds on non-union employees to fund the stake O'Bomber gave to the UAW...who had no, repeat NO possible reason to receive ANY stake in GM whatsoever.