California tough for GM, but Chevrolet Volts are hot

By Nathan Bomey, USA TODAY and Detroit Free Press

Low national demand for the Chevrolet Volt prompted General Motors to stop building them for five weeks in April and May, but sales are heating up in California -- thanks to a $1,500 state tax rebate in the high-tax state, solo access to coveted carpool lanes on the crowded freeways and gas prices there still north of $4.

GM says Volt owners have saved 2.1 million gallons of gas.

California Chevy dealers are scrambling to get the extended-range electric cars, even as GM still plans another shutdown for three weeks this summer at the Detroit-Hamtramck plant that builds the Volt.

"I've had more people talk to me in the last couple months about the Volt than I have in the last year," said Bill Cumming, general manager of Ron Baker Chevrolet in National City, Calif., a San Diego suburb. "Currently, I have none in stock."

Nationwide, Volt sales remain mediocre at best -- just 1,680 in May. But the car is gaining momentum in California, where hybrid and electric car owners can drive alone in the carpool lanes. Through the first quarter, California accounted for nearly 23% of all Volt registrations, according to R.L. Polk.

To put that in perspective, that amounted to 837 Volts in the quarter -- only about 100 more than Chevy has sold in the U.S. every day this year of the similar Chevy Cruze conventional compact cars.

While the Volt numbers are still small, the halo effect for GM is large. California has been a tough market for GM, so any boost in sales and image there is good news.

But it's more difficult for GM to supply Volts to California than for other states. The cars must have a special low-emissions package that tweaks the gas engine to near zero in order for owners to get the state perks. And the package cannot be added after production.

(All buyers nationwide of the about $39,000-to-start Volt -- including in California -- may qualify for the $7,500 federal subsidy on electric cars.)

Considering that GM's market share in California was only 9.3% during the first quarter vs. 17.4% nationwide, Chevy can't pass on any opportunity to sell a car there.

"It is crucial that the Volt performs well there. Volt's success there says that Volt is, indeed, an environmentally advanced and friendly vehicle," says Polk analyst Thomas Libby. "GM and the other domestics have for years struggled in California; the success of the Volt in California will help GM in its efforts to be viewed as a competitive manufacturer."

Despite the state and federal tax incentives and other perks, the car remains expensive for most consumers. But California has a high concentration of wealthy car buyers more immune to sticker shock.

And one dealer says it's carpool lane access that's the biggest purchase driver for most California buyers, says a Chevy dealer:

The carpool lane incentive has been in effect since February. The state has 1,400 miles of carpool lanes that are so coveted that some drivers resort to inflatable dolls and mannequins to appear to have enough passengers to use the lanes. GM says the Volt is selling particularly strongly in the congested San Francisco, Los Angeles and San Diego markets.

Mike Luner, executive manager of Del Grande Dealer Group's Capitol Chevrolet in San Jose, estimated that carpool lanes were the "primary deciding factor" for nine in 10 Volt buyers.

"Time is the most valuable commodity to these people," Luner said. "Our idea is that we want to take the opportunity to capture them with the Volt but for them to consider the other products that Chevrolet has in the future."

"There is a shortage of Volts for us," said Darryl Holter, CEO of Downtown L.A. Auto Group, whose Felix Chevrolet dealership had sold 29 Volts this year as of May 29. "We'll look to other dealers to see if they have any."

GM spokeswoman Michelle Malcho said GM was "really just starting" to meet demand for the Volt in California within the last several weeks.

"We sold everything we had out there basically," she said.

Some California dealers are so desperate for Volts that they're offering to buy more from dealers in other states.

"They had that shutdown for five weeks, which gave us no inventory," said Steve Krueger, inventory and fleet manager for Courtesy Chevrolet in San Diego. "We were buying them from out-of-state and selling those."

Shaun Del Grande, president of Del Grande Dealer Group in the Bay Area, said Volt supply at Capitol Chevrolet has improved in recent weeks. He said the carpool lane ruling has been a "tremendous" boon to sales.

"We're seeing new customers at Chevrolet that we've never seen before," he said.