Is Government Motors [GM] living up to it's name?

Question

Another colossal government waste of money and with cars like this .. GM for sure lives up to "Government Standards" .. agreed?

"Insight: GM's Volt: The ugly math of low sales, high costs"

"General Motors Co sold a record number of Chevrolet Volt sedans in August — but that probably isn't a good thing for the automaker's bottom line.

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."

Read more:http://www.reuters.com/article/2012/09/10/us-generalmotors-autos-volt-idUSBRE88904J20120910

Answer 1

GM does not lose money on every Volt produced. The author of the Reuters article makes an ignorant mistake - you don't just take the development costs of a car and divide it by the number of cars produced, and declare the number you come up with as a "loss."

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Try this with ANY car, and you will come up with a huge supposed loss. Every car has development costs in the hundreds of millions or billions. The all-time record is held by Ford's very conventional Mondeo model (from the 1990s) which had $6 billion in development costs.

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This development money is a "legacy" cost. It's water under the bridge. It won't change no matter how many cars you sell. If you stop selling cars, it doesn't get smaller! These costs are designed to be recouped over a decade or more. This is why it can't be calculated as a "per-car" cost.

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The only way to NEVER get your development money back is to stop selling cars. Then, and only then, does it become a loss. And Volt is not going anywhere. August was Volt's best selling month ever.

Answer 2

This reminds me of back when PCs were a new thing and to buy one costed a couple of grand for a half-meg dos-based machine. The 286 came in with more power and memory and costed a few grand, and the 386, 486 and pentium were still miles above average price at fifrst compared to todays PC prices for machines that run circles around the moon and back.



If you add research and development costs for every model car you will see very high cost until a few years down the line. Take into account all the R&D that went into the first Volt many years ago. I still wonder if the quote for cost of production on the new Volt is actual or if it's just like high cost for brand-name drugs. Somebody is infalting prices out of this world for things the customer never really gets.



Now, consider that GM is a worldwide corporation. Don't stay fooled by all the doom and gloom in the news about just the factories in the USA. GM makes money all over the world, not just here. I think Reuters is looking through a drinking straw at propaganda, and not doing actual research on this story.

Answer 3

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Answer 4

They are as worthless as the government that kept them going on Your dime.