GM Wants More Volts, Already Building More Trucks

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Word broke Monday that General Motors was contemplating yet another boost of the Chevy Volt’s production targets, in anticipation of a likely spike in gas prices. But on the same day of this fortune-telling, the automaker officially announced immediate actions to boost production of its more popular gas-thirsty heavy-duty pickups.

GM is trying to meet demand for its Chevrolet Silverado and GMC Sierra 2500 and 3500 Heavy Duty pickups by adding an extra shift in the second quarter, according to PickupTrucks.com. GM is trying to nip any of the potential supply constraints, like the ones that happened with its SUVs and small crossovers last summer. The resigned Chevrolet Equinox and GMC Terrain simply couldn’t be built fast enough to meet the demand. Months later, the plant has added capacity, and the two vehicles have seen a 60% increase in sales, for three consecutive months.

GM’s worries over the Volt are probably valid down the line, too. GM CEO Dan Akerson says the company doesn’t want to be “caught flat-footed” like it was in 2008. According to Bloomberg, Akerson is trying to anticipate a rise in gas prices — GM believes oil prices could go as high as $120 a barrel, up from the current sub-$90 price — and what that might do to future demands.

While the Volt has been on sale only for a month, GM wants to double production of the model by 2012, up to 120,000 units a year, according to Bloomberg. GM had planned to build 10,000 Volts in the first year and 45,000 in 2012; now it’s 25,000 for 2011 and more than 60,000 units in 2012. GM is also exploring the possibility of adding the Volt’s Voltec drivetrain to more models, such as a minivan, which we probably got a glimpse of with the Volt MPV5 Concept. The Volt’s sales numbers may be wildly optimistic, considering the Toyota Prius barely sells above that level and that vehicle is significantly cheaper, but it’s better to prepare now rather than miss out on potential new buyers in the same way they did with the Equinox and Terrain.

Comments 

Bowrider

I remember when gas prices were over $4/gallon. People were buying used Prii at higher prices than the sticker of a new one. So, I think GM is headed in the right direction with this foresight. In Florida, gas is pushing $3.50/gallon right now.

Amuro Ray

"GM is headed in the right direction"

I don't know...I would say it's more about fleet mileage/mpg/etc. more than anything else. Seriously, a 41K + vehicle is NOT gonna generate any sales volume, compare to, say, a Cruze or Sonic.

Khadgars

@ AMuro

Well with that logic then there is no reason to sell the Prius either since the Corolla and Camry sell many times that of the Prius.

The Volt is the first leap forward since the Prius and I expect the technology to move to an assortment of other vehicles.

Rockaby

@Khadgars,

The Sonic is around $15,000 while the Volt is $42,000. The Prius is $23,000 while the Corolla is $16,000. THAT'S what he's talking about. Price driving the sales.

Amuro Ray

@Khadgars,

Prius was introduced not to combat gas prices (1997 - gas prices was much cheaper). It was built to show case a technology, and it was built with a limited # based on the demand back then. It was priced similar to the Camry (MSRP $20K). But it really wasn't built to combat gas prices at the time.

However, my take on the above is that Volt's production increase is to combat gas prices. A $41K vehicle to combat gas prices? There's no previous data to rely on as to how many they can really sell (unlike Cruze/Cobalt and Sonic/Aveo). My calculation previously has shown that it'll take sthg like 10-15 years to recoup the extra cost, without factoring in a new battery by then. Most important of all, there ARE alternatives NOW, there were NONE back then. If they do not want to get flat-footed with high oil prices, it would be more logical, IMHO, to build more Sonic/Cruze.

Moreover, and I don't agree with Colin's comment "better to prepare now rather than miss out ... Equinox and Terrain." That really go against a fundamental supply chain strategy (that's been proven successful in many industries so far): JIT
http://www.exforsys.com/tutorials/supply-chain/supply-chain-management-just-in-time.html

Thomas M

And while gas prices go up GM hires back 650 more workers to build pick-up trucks. I see GM hasn't changed one bit!

Khadgars

@ Rock

The base model for the Prius is $23k but the average price of a Prius sold is much higher and goes as high as $37k for the top end model.

Your point is still largely baseless because the Prius makes a tiny fraction of the car sold by Toyota.

If GM does indeed sell 120,000 Volts for 2012 thats approaching Prius sells numbers which is a vehicle thats in it's third generation. More than anything else I think it shows that there is a market for advanced vehicles like the Volt.

My opinion is that GM is making sure it hits as much demand as it can as it's obviously they're very confident in the quality of the Volt, while as the same time rapidly reducing the cost.

I agree the Volt is to expensive in the long term, but I'm confident GM will be able to reduce the cost of the Volt by the 2013 calender year. The great thing about the Volt is it's in it's first generation, so many things that can still be improved upon an already highly advanced vehicle.

You should check out the logs of people who already have Volts, many of them are traveling over 1000 miles on as little as 5 gallons of fuel in the dead of winter.

Amuro Ray

Not to rain on the parade...ok, I'm raining on the parade, but seriously, that "Volt demand #" is just as good as my next guess on the upcoming Lottery #s.

As far as "market for an advance vehicle like Volt," the price point will just kill it.

One thing that you MUST remember, Khadgars, the most expensive component of Volt is the Li battery. Don't bathe on the GM kool-aid 'bou decreasing cost by 2013. Li is a rare earth metal, controlled mainly by several companies - kinda like OPEC. They will not be happy to see Li price going down. Add to that is the fact that a lot other electronics use Li as battery of choice, making the metal more valuable. Most importantly, by the time that Li battery is cheap, there is a big possibility that "we" have already moved onto another type of battery power, and we'll have to pay an expensive price for the new battery (no longer Li), and probably some other new features too. There's always something new...just take a look at cars, televisions and DVDs, or even computers - the replacement models are almost always at the same price, or even more expensive than the previous versions. Saying that price will go down is really a fallacy.

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