GM shaves $5,000 from Volt

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Ampera from GM

GM made the unofficial official today, cutting the price of the 2014 US Chevrolet Volt to $34,995 — $5,000 less than the 2013 model.

Ampera from GMNews on the UK and European models is less clear as of right now. A price cut would be major benefit to help push Ampera sales in the UK.

What they didn’t say was, “We sort of did that a few months ago, but without shouting it from the rooftops, it didn’t have the effect we hoped for.” So now the secret is out. And if history is a guide, it should help, although perhaps not dramatically.

But it’s one thing for that to be true and another for everyone to know it. Chevy has been back advertising their lease special on the car for a couple of months. It sold 23,461 Volts last year, but looking at the August-October period when the lease deal was in full force and extrapolating that over a year, the car would’ve moved closer to 35,000 units. While neither figure is breathtaking, the latter would’ve put the Volt near the top 100 rather than in 127th place on the list of cars tracked by GoodCarBadCar.Net.

Chevy’s problem, though, is that the Volt is simply too expensive, especially early in the year when a buyer might face a wait of nearly 18 months before receiving their $7,500 tax credit with the following year’s refund. And without lease support, 2013 sales barely ran ahead of 2012 until June, when the discounting came back, along with a more visible television presence. And it seemed to work, with June sales of 2,298, nearly 1,000 more than the prior year. But July lacked follow through; year-to-date sales are now barely above 2012′s, and that forced GM’s hand.

Akerson apparently is now putting his money where his mouth was. Though the 2014 is unchanged from a consumer perspective except for the addition of a couple of color choices, it’s apparently less expensive to build. ”We have made great strides in reducing costs as we gain experience with electric vehicles and their components,” Chevy’s U.S. chief Don Johnson said, as quoted in The Wall StreetJournal. ”We want to pass those cost savings back to consumers and we have done that with the 2014 model.”

The question now is what kind of sales this will generate. Nissan’s Leaf electric vehicle, which many consider the Volt’s main competitor though the two cars are very different, has already surpassed all of last year’s sales in 2013 thanks to a large price cut on the car. But the Leaf didn’t even reach 10,000 sold in 2013, so it’s growing off a much smaller base. Whether Volt sales see a similar uptick might depend on (1) whether GM’s marketing begins to resonate with customers and (2) whether gas prices stay high.

It’s also worth noting that the competitive landscape is significantly altered versus a year ago. Honda and Ford now sell similar vehicles to the Volt, so-called plug-in hybrids, in the popular Accord and Fusion lines. While neither offers the electric range of the Volt (13 and 21 miles respectively, against 38 for the Volt), both provide a portion of the “green cred,” especially if one has a short commute or can charge at work. And both look like their non-plug-in siblings, while the Volt has a quirky, unique look that is an acquired taste.

Still, what the Volt does have is an increasing base of owners who love the car. It topped the Consumer Reports owner satisfaction survey the past two years running. An industry-leading 92 percent of owners would buy it again. The car basically requires no maintenance outside of tire rotation for the first 45,000 miles. Oil changes are on the docket occasionally, too, but keep in mind the average Volt owner is driving 62% of their miles on electricity so those are rare. While most are getting 900 miles between visits to the gas station.

For GM, this is hardly a last chance on the car, which has become a political football in the U.S., brought up constantly in discussions about the merits of the GM bailout. The fact the Volt was in development before GM declared bankruptcy seems to be sidelined when that football gets tossed around. And the Volt gets a pricey sibling later this year, when Cadillac’s ELR goes on sale, using a similar drivetrain in a more luxurious wrapper.

In a year where Tesla has seen sales soar in the first full year of Model S (official second quarter numbers and analysis here tomorrow) and Nissan’s price cut has done its magic, Chevy is doubtless feeling left out. Soft pedaling its own lower sticker hasn’t done the trick. Shouting it from the rooftops can’t hurt.

Reporting from Forbes

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