GM Faces New Problem With Chevy Volt - From Its Own Dealers

GM may be back on top as the world's top automaker by sales volume (but which counts for little when the real test is profits per vehicle - the bottom line), but it doesn't mean that the company is out of the woods by any stretch.

The Chevy Volt bet seems to be running into more problems. Even though the company has instituted upgrades to the steel frame around the battery pack to prevent potential fires that occurred in crash-test vehicles (and has not occurred on the road) and instituted a recall to carry out the work, dealers are rejecting portions of their allocated vehicles.

Chevrolet dealers in some U.S. markets are turning away Chevrolet Volts that General Motors is allocating to them, indicating that consumers remain concerned that the extended-range plug-in vehicles pose an additional safety risk relative to convention cars, are too expensive or are otherwise not as desired as GM thinks, Automotive News (subs. req.) reported.

New York City-area Chevy dealerships took just 31 of the 104 Volts allocated to them last month, while one Northern California dealer turned away all six Volts offered to him, according to the publication. Another East Coast dealer reported a "huge dropoff" in Volt interest. Overall, dealer orders for Volts have declined, Automotive News said, citing GM spokesman Rob Peterson.

So, dealers in some of the markets critical to the success of the vehicle are rejecting the car, claiming that their own experience are showing that customers aren't interested. That is despite selling a record 1,529 Volts in December (but a lowly 7,671 Volts for all of 2011 when the company hoped to sell 10,000 in 2011). What isn't noted in these sales figures is how many of the vehicles are allocated for fleet sales, and how many are going to individual consumers - though the dealer reluctance to take on the vehicles suggests that consumers aren't buying into the hype around the Volt (or its high price compared to other vehicles in the same class).

GM has a problem on its hands, and it's going to take more than a PR move to fix. It has to find a way to win over its own dealers and get consumers in the door - incentives that eat away the revenues and undermine the bottom line.

There's the rub, after all. You can sell a million cars, but if you're spending more to get them out the door than it costs to make and market, then you're going to lose money. GM knows all about losing money too.

Now, this doesn't mean that the Volt can't go on to be a successful vehicle. The company has to reduce costs and make it more affordable - and leverage the technology in the Volt to other products.