It's a banner day here on brandchannel — the only time that we've mentioned Rush Limbaugh twice in one day, for entirely different stories that he's found (placed) himself at the center of. What has the inflammatory talk radio host done this time?
As Limbaugh noted on his show today, some (read: the left) are blaming him for putting a ding in GM's Chevrolet Volt plans with layoffs halting production until April 23rd. If the Chevrolet Volt is going down, as Limbaugh has been predicting, he's not singlehandedly the reason, of course. The real "culprits" range widely but center on some usual suspects, including media hype and the collective wisdom of the American consumer.
The news on Friday that General Motors will be suspending production of the plug-in hybrid came as a surprise, given that sales of the car in February rose back to more than 1,000 units after publicity over the federal government's fire-safety probe of Volt had plunged them down to about 600 units in January. Volt is also sharing the 2012 European Car of the Year title with the Opel Ampera.
It turns out that Volt's sales spark last month was a dead-cat bounce, because in announcing its temporary idling of the 1,300 Detroit autoworkers who assemble Volt, GM cited the need to slim down already-built inventories of the car that will last nearly a half-year at recent sales rates.
After the federal government cleared Volt in its safety investigation in January, GM executives said that they were going to make a long-term decision on Volt production in the spring, and that still seems to be the case. Indeed, Chevrolet released the video above touting the vehicle's fuel efficiency.
The landscape still needs to clarify a bit before they can make the right strategic call on a vehicle that is so high-profile: hailed as a veritable icon of what is right with "green" energy by President Obama and as a "halo" vehicle for the company by GM CEO Dan Akerson, while being derided as a boondoggle by critics and, at worst, as the poster project for environmental extremism.
Some of the major factors GM's brain trust will be considering as they recast their Volt strategy:
Media bias: GM was quick to blame media "exaggeration" of the safety concerns that were investigated by the National Highway Traffic Safety Administration and then dismissed as baseless — after GM already had announced a mechanical "fix" and even had gone to the trouble of swapping cars with some Volt owners who were concerned about the vehicle's crashworthiness.
But this is actually where GM risks biting the hand that has fed Volt's positive buzz over the last three years. While understandably seizing last fall on the sensational news of Volt's potential safety defects, which would be red meat for any journalist covering the auto beat, the truth is that many of the folks who regularly cover the company and the industry harbor support for Volt. Liberal thinkers populate the car beat just as they do most of the other coverage by the nation's mainstream news media.
And many auto reporters also are admirers of Bob Lutz, the erstwhile GM vice chairman-turned-author who was a driving force behind Volt before Barack Obama was. Lutz himself mounted a defense of Volt in a recent blog post on Forbes.com in which he predicted that layoff of Volt workers would be the outcome of criticism of Volt by those on the right.
GM likely won't go much further in blaming Volt's woes on the media. The company would have to make too fine a point about exactly whom they're criticizing.
The business case: Whatever the reason, Volt sales haven't yet achieved GM's projections for them at this point in the car's history. And so, like any vehicle that disappoints sales expectations — whatever its broader or even historical significance — the company simply can't keep pumping them out of its Detroit factory interminably and keep insisting that Chevy dealers find somewhere to stash the pricey new units on their lots.
The fact is, it isn't yet clear whether Volt makes sense as a financial proposition to mainstream consumers, the vast majority beyond the "early adopters" who continue to flock to the car. It's obvious that Volt is the most common-sense approach to vehicle electrification that any automaker yet has come up with, simply because it removes the "range anxiety" that plagues all-electric vehicles which lack the onboard gasoline engine in Volt.
Yet at a price of about $41,000, even with a tax credit of up to $7,500, Volt simply doesn't calculate as a sensible buy to many Americans. Or maybe Volt is simply ahead of its time, and perhaps by an eon unbridgeable now by environmental rectitude or even government subsidies.
Volt's ideological critics are quick to point out that Volt's lack of financial practicality is at least as damning in their eyes as the rampant cheerleading for the car by the forces of green and Obama.
"I predicted before they made it that [Volt] wasn't something Americans would make a mad dash for," Rush Limbaugh, a Volt critic singled out in Lutz's post, said on his program on Monday. "There's no business there yet." (This, of course, was after Limbaugh took most of the first hour to address the Sandra Fluke kerfuffle.)
Gasoline prices: This is the wild card that may overwhelm the other two factors. If gasoline prices run all the way up to $5 or more after already penetrating the $4-a-gallon level across much of the nation in the last few days, Volt prospects re-boot. Once again, electric vehicles will be hailed as immediately available saviors for Americans' pain at the pump, and Volt sales could be revitalized almost quickly as they lost their charge.
Political calculus: But gasoline prices will be joined by another significant factor over the next six months: the political implications of Volt and its future.
Will GM and the Obama administration be successful in positioning Volt as a common-sense yet technologically enlightened solution to rising gasoline prices, a rather suddenly fitting symbol of industrial foresight that is being unjustifiably threatened by luddites and oil-firsters on the right? Or will the car's critics succeed in painting Volt as an example of environmental overreach that makes the Solyndra scandal pale by comparison, advocated by the same forces who won't help dampen gasoline prices by building the Keystone XL pipeline?
For now, as they ponder their answers to these questions after making their statement on Volt production on Friday, GM executives have chosen to switch their own Volt buzz burner down to simmer. New TV ads for the car, such as the one above, focus on customer endorsements of Volt's merits as a vehicle, although one recent commercial — praising Volt production in Michigan — seems to have disappeared from YouTube. A couple of other new Volt videos are posted below: