GM Falls Short of Expectations
by The Milton Measure on Friday, February 10th, 2012
As the first quarter of 2012 begins, General Motors (GM) must realize that the Chevrolet Volt has seen noticeable lull in sales performance, with January being its poorest month since August 2011. Despite initial hype, GM set low hopes for the Volt’s first year, forecasting sales of only 10,000 vehicles in 2011, yet the Volt was unable to meet even this lowered expectation; GM only managed to sell 8,600. For the 2012 calendar year, GM had planned to produce 45,000 Volts worldwide, but the auto-giant announced that it would manufacture only enough cars to meet demand.
These numbers put GM far behind the competition. In 2011, Toyota sold 134,463 Prius hybrids in the United States. The range and fuel-economy of the Volt is only average compared to the market. Moreover, the car’s price of over $40,000 makes it unattainable for most prospective customers.
In late 2008, GM took government assistance to stay afloat. In early 2010, with a new IPO, the car maker appeared to be on a profitable track. Since then, however, GM’s sales have been poor, and the company is still relying on SUVs, like the Suburban and the Escalade, along with the Colorado Pickup, to generate revenue.
The Leaf, an awkward-looking Nissan also released in December of 2010, has fared much better that its attractive GM counterpart. $8,000 cheaper than the Volt with comparable tax-incentives (which usually amount to about $7,000) and thus only about $5,000 more expensive than the popular Prius, the Leaf clearly knows its market. Unlike the Volt, the Leaf is completely electric. The Leaf has had worldwide appeal, especially in Europe, by appealing to college graduates, small families, and conservationists. The future of mass individual transportation lies in completely electric vehicles like the Leaf. Nissan’s car represents a leap ahead – it charges quickly at any outlet for emergency power, and is small and affordable.
GM is resting upon the success of large SUVs that were popular before the recession, but it has not effectively changed its lineup to reflect a more frugal, post-recession consumer. The auto-giant is not finding success because its ideas for new vehicles are not innovative. In short, GM must come up with concepts that meet the needs of the consumer.
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