General Motors Co. (GM:US), facing disappointing Chevrolet Volt sales, cut the starting price of the plug-in hybrid sedan by $5,000 to compete against the less-expensive and better-selling Toyota Prius and Nissan Leaf.
The 2014 Volt, arriving in U.S. dealerships later this month, will start at $34,995, the Detroit-based automaker said today in an e-mailed statement. The price cut comes, in part, to make sure the Volt shows up in online shopping searches along with the Prius and Leaf, which start, respectively, at $25,010 and $29,650, including destination fees, GM said.
“GM is getting with the times,” Michelle Krebs, a senior analyst with Edmunds.com, a website that tracks auto pricing, said in an e-mail. “Consumers want electric and plug-in hybrid vehicles at prices competitive with other vehicles without the advanced technology.”
GM loses money on each Volt it sells while not disclosing a specific figure. The model, which is eligible for a $7,500 U.S. tax credit, was introduced in 2010 and has struggled to meet some sales targets. Volt is GM’s flagship car for its efforts to have about 500,000 vehicles on the road by 2017 with some form of electrification. The car can travel 38 miles (61 kilometers) on battery power before a gasoline engine engages.
“We have made great strides in reducing costs as we gain experience with electric vehicles and their components,” Don Johnson, Chevrolet U.S. sales vice president, said in the statement.
While Volt sales rose 9.2 percent through July, deliveries slipped 3.3 percent last month. That followed a 53 percent gain in June when the average cost of incentives per Volt was $6,195, according to Edmunds, citing the most recent month with available data.
Leaf sales accelerated this year after Nissan Motor Co. (7201) in January added an S version of the Leaf that’s cheaper than the SV and SL models. Unlike the Volt, the Leaf has no extended range engine. Leaf sales more than tripled to 11,703 through July from 3,543 during the same period a year earlier, outselling Volt in the U.S. by 60 vehicles.
Toyota Motor Corp. (7203)’s Prius is the most frequently traded-in vehicle for a Volt, GM said in the statement.
U.S. sales of the Prius were little changed through July with 143,508 deliveries. Those results include sales of a plug-in version of the Prius, which saw deliveries slip 8.3 percent, according to researcher Autodata Corp. The plug-in Prius starts at $32,810. Toyota also sells a subcompact Prius c that sells for $19,890.
GM fell 2.1 percent to $35.96 at the close in New York. The shares have surged 25 percent this year, compared with a 19 percent climb for the Standard & Poor’s 500 Index.
GM created the Volt to help add a green sheen to its image and compete against Prius.
The Volt, chosen as 2011’s North American Car of the Year, succeeded in satisfying its customers, with 92 percent of survey respondents telling Consumer Reports they would buy one again.
Even with the accolades, the car struggled to garner the kinds of sales sought by Chief Executive Officer Dan Akerson, who had forecast global Volt sales of 60,000 in 2012, before settling for about half that amount.
In late April, Akerson said GM was working to cut the price of producing the Volt by as much as $10,000 each without removing features for the next-generation version which he indicated could come out in 2015 or 2016.
“We know we have to reduce costs,” Akerson said during an interview in April. “We’ve got to look at smart ways at getting it better positioned from a price perspective and that means we’ve got to take cost out of it.”
To contact the reporter on this story: Tim Higgins in Acme, Michigan at firstname.lastname@example.org
To contact the editor responsible for this story: Jamie Butters at email@example.com