Just a few weeks after General Motors curbed production of Volts, Chevrolet dealers in California are scrambling to get the extended-range electric cars on their lots as sales surge because of special state incentives for electric vehicles and West Coast gas still above $4 a gallon.
It's ironic because lower demand, in general, prompted GM to shut down production for five weeks during April and May. GM still plans a three-week shutdown this summer at the Detroit-Hamtramck plant.
"I've had more people talk to me in the last couple months about the Volt than I have in the last year," said Bill Cumming, general manager of Ron Baker Chevrolet in National City, Calif., a San Diego suburb. "Currently, I have none in stock."
U.S. sales of the Volt remain mediocre at best -- just 1,680 in May. But the car is gaining momentum in California, where hybrid and electric car owners are allowed to use carpool lanes no matter how many people are in the car. Through the first quarter, the Golden State accounted for nearly 23% of all Volt registrations, according to R.L. Polk.
It's more difficult to supply the California market because Volts must have a special low-emissions package for owners to qualify for special state incentives. And the package cannot be added after production.
Considering that GM's market share in California was only 9.3% during that period, compared with 17.4% nationwide, Chevrolet can't miss any opportunity to meet demand in the most populous state. Buyers registered 837 Volts in California in the first quarter. The next-best market was Michigan, at 232 registrations, or 6.28%.
"It is crucial that the Volt performs well there. Volt's success there says that Volt is indeed an environmentally advanced and friendly vehicle," Polk analyst Thomas Libby said in an e-mail. "GM and the other domestics have for years struggled in California; the success of the Volt in California will help GM in its efforts to be viewed as a competitive manufacturer that offers contemporary and competitive products."
The supply and demand issue for GM is complex when selling Volts in California.
For Volts headed to California, GM tweaks the exhaust system to reduce emissions from its gas generator to virtually zero. The low-emissions package qualifies owners to drive solo in special carpool lanes and receive a $1,500 state tax rebate. All Volt owners, regardless of state, qualify for a $7,500 federal tax credit.
Starting at about $39,000, the car remains expensive for most consumers. But in California, which has a high concentration of wealthy car buyers, the sticker price isn't as shocking.
Lure of carpool lanes
The carpool lane incentive has been in effect since February. The state has 1,400 miles of carpool lanes that are coveted real estate for commuters grappling with congestion. Some resort to inflatable dolls and mannequins to appear to qualify for the lanes.
GM says the Volt is selling particularly strong in the San Francisco, Los Angeles and San Diego markets -- areas notorious for intense congestion.
Mike Luner, executive manager of Del Grande Dealer Group's Capitol Chevrolet in San Jose, estimated that carpool lanes were the "primary deciding factor" for nine in 10 Volt buyers.
"Time is the most valuable commodity to these people," Luner said. "Our idea is that we want to take the opportunity to capture them with the Volt but for them to consider the other products that Chevrolet has in the future."
"There is a shortage of Volts for us," said Darryl Holter, CEO of Downtown L.A. Auto Group, whose Felix Chevrolet dealership had sold 29 Volts this year as of May 29. "We'll look to other dealers to see if they have any."
GM spokeswoman Michelle Malcho said GM was "really just starting" to meet demand for the Volt in California within the last several weeks.
"We sold everything we had out there basically," she said.
Calling on other states
The Volt has been a target of conservative pundits who have tied it to the government's rescue of GM through the 2009 bankruptcy restructuring. GM began engineering the car at least as early as 2007.
Two fires in Volt battery packs on cars that had been crash-tested generated another round of criticism. No Volt owners have experienced a fire in their cars.
When GM backed off its 2012 production targets for the vehicle, the criticism got louder, and CEO Dan Akerson lamented that the car had become a "political football."
But in California, the positive buzz for the Volt seems to be drowning out the criticism.
Some California dealers are so desperate for Volts that they're offering to buy more from dealers in other states.
"They had that shutdown for five weeks, which gave us no inventory," said Steve Krueger, inventory and fleet manager for Courtesy Chevrolet in San Diego. "We were buying them from out of state and selling those."
California dealers said buyers are quicker to embrace new technology, and the Volt's reputation as an environmentally friendly car is gaining traction.
Shaun Del Grande, president of Del Grande Dealer Group in the Bay Area, said Volt supply at Capitol Chevrolet has improved in recent weeks. He said the carpool lane ruling has been a "tremendous" boon to sales.
"We're seeing new customers at Chevrolet that we've never seen before," he said.
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