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Incentives Good For Chevy, Volt Customers, And Dealers, Says Industry Reporter

 
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2012 Chevrolet Volt

2012 Chevrolet Volt

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Last month, Chevrolet sold a record-breaking 2,831 of its Volt plug-in hybrids, making it the top-selling plug-in car in the U.S. to date. 

No doubt helped by its recent ‘Happy Owner’ online ad campaign, as well as deals offering prices as low as $249 per month or less for a 24-month lease, Automotive News reports extra dealer incentives may have also helped the automaker sell 1,000 more Volts in August than it did in July.

Traditionally, any profit made from the sale of a car in a dealership, along with any commission for the salesperson making the sale, comes from the difference between the price paid by the dealership for the car, and the price it is sold to the customer, plus any extras sold with the car. 

In the case of the Chevrolet Volt, the price paid by dealers for the car is so close to the sticker price that many dealers don’t see a profit in selling the car.

As a consequence, it is often easier, and more profitable, for a dealer to sell two $16,800 Chevrolet Cruzes or $22,390 Malibus than it is to sell a $39,145 Volt

Over the summer however, alongside its heavily discounted, now-ended deals to customers wanting to buy a Volt, Chevrolet incentivized dealers to sell the Volt by paying them bonuses for hitting, and beating sales targets. 

For every car sold over each dealer’s sales targets, Chevrolet paid an escalating bonus to the dealership, up to a massive $2,500 for every Volt sold in dealerships where sales were triple the target figure.

Under this so-called stair-step program, one dealership in Rockville, Maryland netted itself $100,00 in bonuses for selling 33 Volts during July and August. Between January and June of this year, it sold just 7.

In some cases, dealers used the promise of a bonus to offer a heavily discounted deal to customers, essentially placing several thousand dollars on the hood above and beyond the existing federal and state tax credits for plug-in cars, and Chevrolet’s own summer offers, to sweeten the deal.

At that Maryland dealer, the collective incentive money went towards a massive $5,000 discount off the MSRP, resulting in a sticker price somewhere in the mid $20,000 after state and federal tax credits were applied.

Even in cases where the incentive money from Chevrolet went directly to customers however, the dealership benefited from increased sales. 

That’s because many -- around 90 percent -- Volt buyers are new to Chevrolet. These so-called “conquest buyers’ increase a dealer’s customer base, ensuring it has a healthy stream of customers for many years to come for everything from annual inspections and service to accident repair and accessory sales. 

The Automotive News analysis was written by Mike Colias, who covers General Motors for the auto-industry trade publication. While generally taking a pro-dealer stance--dealers are its largest pool of advertisers--Automotive News hasn't always been in favor of the Volt and electrification as a concept.

2012 Chevrolet Volt

2012 Chevrolet Volt

Enlarge Photo

Now, after 18 months of Volt sales, that car's sky-high owner satisfaction ratings--and the fact that it brings valuable new customers to GM, customers so new they have to Google the location of their Chevy dealer because they've never even considered buying a domestic car--seem to have won the day.

While we suspect some cynics will use Chevrolet’s dealer incentive program for selling the Volt as another excuse to claim the Volt a failure, there is at least another way of looking at it. 

The Chevrolet Volt sells itself, as long as the price is right. 

And putting more plug-in cars on the roads of the U.S., incentivized or not, has to be good, right? 

+++++++++++

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Comments (6)
  1. If incentives as little as $2500 can make the Volt move, that is a good sign.
     
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    Bad stuff?

     
  2. Seriously! $7500 Fed. + State + Up to $5000 dealer you could sell dog poop with those incentives!
     
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    Bad stuff?

     
  3. Like your Prius had in its early days?
     
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  4. Some of the things Nikki is saying here just is not true.
    The profit margin between dealer invoice and MSRP for the Volt is actually NOT significantly lower than any other GM product.
    Sell two $16,800 Cruzes ($33,600 total) and take home more gross profit? umm sorry no.
    Perhaps on the $22,390 Malibus...
     
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  5. Well, GM has more margins to give. According to the same BASHING Reuter's article, it estimated that GM profit on each Volt (before the R&D loss) is about $13k-$20k per car. So, a $2,500 discount is NOT much to dent that profit. Now. A $17k Cruze cost about $13k to build. That margin is only $4k. FAR LOWER than the Volt. Dealder might be willing to sell more cruze but GM is certainly making more money off each Volt.

    Also, I am SURE that GM already saved that much money by STOP ADVERTISING ON FACEBOOK and spend it on Volt discount to draw buyers into their dealer lots...
     
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  6. $2,500 per car for 3,000 cars is only $7.5million. Far less than a typical monthly GM ads budget...
     
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