Chevy Volts Are All But Sold Out in America

NEW YORK (TheStreet) -- On Friday, GM (GM) announced its third pause in the production of the Chevrolet Volt since manufacturing begun in late November 2010. The two previous breaks were in June-July 2011 and most recently in an extended holiday break ending February 6, 2012. This time, the pause will last five weeks, from March 19 to April 23.

Unlike in the two previous breaks, in this latest move GM is sayingthat sales are slow, so that manufacturing needs to slow down accordingly. A prominent and well-publicized article late last week alleged that GM is engaging in channel stuffing with the Chevrolet Volt.
Chevy Volt
Chevrolet Volt

As in turns out, widely available evidence hiding in plain sighttotally disproves the thesis that there is too much Chevrolet Voltinventory at Chevy dealerships. To the contrary, the evidence clearlyshows that Volt inventory is at an almost insanely low level, farlower than essentially all other cars.

According to cars.com, where anyone can look at every car sittingunsold in a U.S. dealership, there are 4,323 Volts unsold at 1,951Chevrolet dealerships nationwide as of Sunday, March 4. The math hereis pretty simple, folks: There are just over two Volts per Chevydealership, on average, in inventory available for sale.

For anyone who has been visiting U.S. car dealerships with anyfrequency in the recent decades, you will know that having only twocars on hand for a given model range is an insanely low number.Dealerships normally have many hundreds of cars on the lot, with muchmore than two cars of each model.

At a minimum, every dealership has at least one demonstration unit ofeach model, which is especially important in the case of the Volt,where the differentiated driving experience is so important. Inaddition to that one demo unit, you will probably want to have on handa combination of most colors available, as well as variants that aresold at base equipment level, as well as fully loaded with alloptions. One would think that each Volt dealer should have somewherein the neighborhood of at least ten Volts on hand in order for it toconstitute a healthy inventory level.

Just to take a quick look and confirm at least a small sample of thecars.com numbers for the Chevrolet Volt inventory numbers, I visitedsome of these dealerships over the weekend. The Chevy dealers Ivisited had so many Cruzes, Malibus, Sonics, Camaros, Tahoes, etc., onhand that it wasn't even meaningful to count them. Rows after rows; asea of cars in stock. But only one Volt. Not two. Not three.One.

GM may be stuffing the channel with all of those other Chevroletmodels -- I didn't bother counting them -- but the evidence is crystalclear that there are way too few Volts at most of the Chevydealerships. Obviously you will find a few Chevy dealershipsscattered around the country that have many more than the average oftwo Volts, but as the evidence shows from cars.com, those dealershipsare very few.

Missing in New York

Let's take New York City, for example. The inventory system indicatesthere is only one Chevrolet Volt available on Manhattan. Onecar for a place where 1.6 million people live, and many more work. Ifyou include the other boroughs, add 16 of them -- for an areawhere over eight million people live, and many more work. This isn'tchannel stuffing: It's more like water in the Sahara desert.

This insanely light level of Volt inventories isn't limited to NewYork City. My investigation into Volt inventories in the SanFrancisco area yielded 17 cars and the greater Washington DC area15. I wouldn't be surprised if plenty an exotic car company canmuster more than 16 new cars for sale in NYC, 17 in the San FranciscoBay Area and 15 in the greater Washington DC area.

With inventories this low, GM must be extremely pessimistic about theprospects for Volt sales in the coming months, given the upcomingMarch 19 to April 23 work stoppage. One wonders why?

Two things should be in order to understand:

1. The Opel, Vauxhall and Holden-badged Volts recently (Feb. 6?)started production, and the backlog from Europe and other geographieswere said to be in the many thousands of units. What is going on withthis?

2. The Volts manufactured Feb. 6 and onward are eligible for thenew California carpool lane sticker, valid 2012 to '15. Many people inCalifornia held off buying Volts manufactured before Feb. 6 forthis reason. In the coming days and weeks, thousands of Volts shouldbe arriving at California dealerships, where they will quickly be putinto the hands of eager carpool lane drivers.

With these two positive things going on, combined with the alreadysuper-thin Volt inventories, one wonders why GM is halting productionat this particular time, even for only five weeks. We are all eagerfor GM to clarify how they envision their Volt math for the upcomingyear.

At the time of publication, author had no positions in stocks mentioned.

Anton Wahlman was a sell-side equity research analyst covering the communications technology industries from 1996 to 2008: UBS 1996 to 2002, Needham & Company 2002 to 2006, and ThinkEquity 2006 to 2008.

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