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

Volt Obama gm General Motors (GM) electric car chevy volt chevy chevrolet 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 –



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