Volt adds luster to Chevy brand
In 1977, Chevrolet won Motor Trend's Car of the Year award for a new Caprice Classic design that trimmed 637 pounds and 10 inches from the previous year's sedan. The downsizing was part of a $600 million effort by General Motors to shrink its vehicles, spurred by the oil crisis four years earlier.
Not only did the Caprice become the best-selling car in America, but it offered some (ultimately misplaced) confidence that GM could wrangle with the flood of increasingly popular compact cars coming from Japan.
Today, Chris Cedergren, a Los Angeles automotive analyst who drives into the office only twice a week because of traffic congestion, sees similarities between the Caprice and the Volt, Chevy's most extreme attempt to give drivers a more fuel-efficient option -- and the brand's latest Motor Trend Car of the Year winner.
"It's the most significant Chevrolet launch in the state of California since the 1977 Caprice," Cedergren said. "How's that for a statement?"
California, with two large metro markets that have been tough for domestic automakers to crack, is all-important for the Volt. Along with New York, California is expected to be the largest market for electric-powered vehicles of all stripes. These include pure electrics such as the Nissan Leaf and plug-in hybrids such as the Volt, whose lithium ion battery that powers the car 25 to 50 miles per charge is backed up by a gasoline engine that gets 37 mpg.
Golden State opportunity
The Golden State will be a test bed for whether Americans can be weaned from gasoline dependency. If Cedergren is right about the Volt's future, it will be a massive win for Chevy and GM. GM marketing chief Joel Ewanick has called for the automaker to become more like Apple Inc. If the demand is there, the Volt could be the company's iPod, the shiny new device that changes behavior on a mass scale. If demand is weak, the Volt could be GM's Newton -- interesting, but ahead of its time.
We're nowhere near knowing which is the case. In September, Chevy's U.S. sales were up 15 percent. GM sales were up 16 percent over the same period. But the Volt accounted for only 3,895 sales.
Critics point to those low sales. The car's haters were hopping in July, when only 125 Volts sold. GM said that had to do with a planned assembly line shutdown and that the 2011 model, of which just under 4,000 cars had been produced, was virtually sold out.
Production has been intentionally slow. The car has only been at dealerships since December and then only in a handful of states. The nationwide rollout is expected to be completed by year end. For 2012, production will ramp up to 60,000, 45,000 of which will be delivered in the United States. Not until then will it make sense to look at sales as a measure of the Volt's value to GM.
Despite the Volt's low sales, the car is drawing consumers to dealerships and helping dent a long-running image problem for GM -- that the automaker can't produce fuel-efficient cars. The Volt, along with the hot-selling Cruze, a fuel-efficient but less sexy compact, are evidence that Chevrolet can make cars that fit the zeitgeist.
"The Volt is doing for the brand what we'd like it to do," said Cristi Landy, the Volt's product marketing director. "There's a misconception that we don't have fuel-efficient cars, and this is helping people see that's not true."
A boost for Cruze
Cedergren, managing partner at Iceology, a Los Angeles agency that tracks consumer trends, argues that the Volts on the road, even in limited numbers, along with the buzz generated by the car, have benefited Chevrolet and GM. He points to Keyes Motors, one of Los Angeles' largest dealership groups, and its decision to buy a Chevrolet store early last year as evidence of a sheen being added to a 100-year-old brand that has struggled with relevance and consumer flash.
More concrete evidence of the early impact is how the Volt's presence in dealerships has helped move other Chevy models. CNW Research of Bandon, Ore., surveyed dealers and found that 80 percent of consumers who check out the Volt don't intend to buy it. The Cruze is a major beneficiary.
GM has observed that consumers are going to Chevy dealerships to look at the Volt but are driving away with a Cruze sedan. The 2012 Volt has a sticker price of $39,995 including shipping, and is eligible for a $7,500 federal tax credit.
The 2012 Cruze Eco, with an EPA fuel economy rating of 28 mpg city/42 highway, has a sticker price of $19,995 including shipping.
"We've seen a lot of cross-shopping with Cruze," Landy said. "Dealers are telling us people are coming because they want to see the Volt demo, but they walk out with a Cruze or a Cruze Eco. Anecdotally, we know it's driving traffic in the showroom."
In the face of light production but heavy interest, GM has required dealerships that carry the Volt to keep one unit as a demo, ensuring that several hundred Volts around the country are available for test drives. By year end, the total is expected to be about 2,500, according to Landy. Alongside that, marketing will have to ramp up.
Although there has been plenty of marketing focused on opinion leaders, and Chevy devoted one of its five Super Bowl spots to the Volt, traditional ad spending has been light. The reason: There's no point advertising something that consumers can't yet easily buy.
That will change soon, though, and Volt marketers will have their work cut out for them. Landy admits that not all consumers understand what the Volt is and how it compares with other environmentally friendly vehicles.
"We have to educate people how the Volt is different from a hybrid or an electric vehicle," she said. "A lot of people are confused.
"We have a customer advisory board that we talk to on a monthly basis. They've become advocates but they're bumping into friends or people at the mall who just don't understand it. There's a big task out there of communicating what the Volt is and what its benefits are."
The relatively high price also will be a factor, said Lonnie Miller, vice president of marketing and industry analysis for the automotive research company Polk:
"You really have to do good ongoing education. With new technology on a big-ticket item, that's a big deal. There are so many new amenities and they have to have the conviction that it's worth a step up relative to what they've been used to."
He added: "The salesperson better have some good points for me to get over my barriers."