Pages

Monday, September 10, 2012

How Toyota Could Bury GM In One Easy Step

... just buy a bunch of Chevy Volts.
Nearly two years after the introduction of the path-breaking plug-in hybrid, GM is still losing as much as $49,000 on each Volt it builds, according to estimates provided to Reuters by industry analysts and manufacturing experts. GM on Monday issued a statement disputing the estimates.
If Toyota and the rest of the auto industry bought enough of them, they could drive GM into bankruptcy.

3 comments:

  1. KT,
    Is that loss based on the marginal cost or average cost to build the Volt? A friend who explained the dynamics of the auto industry said that a major chunk of the costs to produce a car are in setting up the production line. Very low sales volume = high losses. Buying more Volts might reduce the losses.

    ReplyDelete
  2. B-daddy:

    According to the Detroit Free Press, GM says that the outrageous loss level that Reuters published includes not only line set-up, but also all of the sunk R&D costs. So yes, if everybody went out and bought a Volt, it would improve GM's finances, not hurt them.

    ReplyDelete
  3. I figured that was the case, but the headline was too funny not to write. Having said that, everyone is not buying the Volt and the thing remains a money-losing toad.

    ReplyDelete