Chevy May Kill the Volt

Slumping US car sales have prompted the United Auto Workers union to initiate talks with General Motors about possibly discontinuing select models and replacing them with more popular crossovers. Among the models under review is the Chevrolet Volt plug-in hybrid, once touted as a game changer for the industry.

It is no secret that car sales have been decreasing steadily for a while as consumers flock to SUVs and trucks. Sales of GM passenger cars dropped 17 percent in the first half of 2017 and 36 percent in June. As sale volume decreases, inventories rise. On July 1, GM car inventories skyrocketed to 126 days from 96 days one month ago. That equates to as much as six months of supply on hand. The plants that build these cars have cancelled several shifts putting hundreds of jobs at risk.

Senior Vice President of LMC Automotive Jeff Schuster sees room for consolidation among GM's array of passenger cars. "GM doesn't need all the sedans it has today. They should look at reducing the number of sedan offerings and replacing some with SUVs or crossovers." The models singled out include the Buick LaCrosse, Cadillac CT6, Cadillac XTS, Chevrolet Impala, Chevrolet Sonic, and Chevrolet Volt.

Commentators are putting pressure on GM to create innovative new products, which was exactly what the Volt was when it debuted in 2010. Plug-in hybrid technology allowed for electric driving without worrying about depleting the batteries' power. The first generation model featured an electric driving range of 38 miles while the second generation could go up to 53 miles before the gas engine turned on. It received awards from multiple organizations including Green Car Journal, the American Council for an Energy-Efficient Economy, Consumer Reports, and a number of automotive publications.

I believe factors hurting Volt sales include cheap gasoline and a nonexistent marketing campaign. Obviously, no one is going to purchase a hybrid vehicle if the payback period for the increased fuel efficiency is too long. That is where marketing comes in. GM and Chevrolet need to position the Volt as a smart investment which is a better buy over the long run. Can you recall the last time you saw an advertisement on TV for the Volt? The only Chevrolet ads I see are for the Silverado and the Equinox with an occasional Malibu thrown in. People buy what they see, and not having a vibrant campaign for the Volt almost certainly dooms it to failure.

As for the other models on the list, the older demographic who purchased cars like the LaCrosse and the Impala are instead turning to crossovers and the perceived safety that comes from a higher ride height and all wheel drive. Cadillac is finding that customers are not lining the streets to buy their line of rear wheel drive luxury cars including the CT6, CTS, and ATS, otherwise the XTS would have been discontinued long ago. The XTS continues to be popular among livery services due to its quiet and comfortable ride. If Chevrolet decides to cancel the Sonic, it does so at its own peril. We live in volatile times, and all car makers should be prepared for economic downturns or rising gas prices. Killing off the Sonic puts Chevy in a position without a cheap and efficient compact car to weather the storm.

It will be interesting to see what happens in the next few years as these models come up for renewal. Some such as the Impala and the Sonic could be discontinued while others such as the Volt and the Cadillacs could be replaced with crossovers with similar missions.

Volvo Commits to Electrification

In a bold announcement this week, Volvo has declared that every car in its lineup will have at least one electric drivetrain motor by 2019. This puts the Swedish brand in a unique position as the first mainstream automaker to fully embrace electric power. Indeed, Volvo has committed itself to an electrified future from the moment it put together a plan to revamp its entire lineup.

Volvo's product plan moving forward is incredibly simple. The brand will focus on three key models in three different sizes. Each size range of vehicles will include a sedan, an SUV, and a wagon. So far only the large 90 series of vehicles has been brought to market. All 90 series cars, as well as the upcoming range of 60 series cars, ride on the same Scalable Product Architecture (SPA). Easing the transition to electric power and avoiding the packaging problems that come from adding extra motors and batteries, SPA was designed from the start to accommodate hybrid and electric powertrains. The same can be said of the smaller Compact Modular Architecture which will underpin a range of 40 series models.

Volvo's only hybrid vehicle at the moment is the plug-in XC90 T8. Dubbed "Twin-Engine," a rear mounted 87 hp electric motor powers the rear wheels while a smaller 46 horsepower motor provides power to the front wheels when needed. The electric motors combine with the four cylinder turbocharged and supercharged gasoline engine for a total system output of 400 hp and 472 lb-ft of torque. This October, the 2018 XC60 T8 will debut using the same setup as its bigger brother. 

High performance electric vehicles are also on the table, and will be sold under the Polestar brand. Polestar has origins in Volvo's motorsports program, making championship winning homologations for various European touring car series. Polestar was purchased by Volvo in 2015 and has assisted in the development of sporty versions of the S60 and V60, sort of like BMW's M division. As separate brands, the relationship between Volvo and Polestar will be similar to that of Hyundai and Genesis. Polestar and Volvo models will share chassis, electronics, and powertrains together. Regular Volvo models fettled by Polestar will carry the "Polestar Engineered" label.

Full details are scant at the moment, but Volvo has promised to provide more details sometime in the fall. Volvo boldly hopes to sell 1 million electric cars by 2025. That would require a substantial increase in market share since the brand only sold 534,000 cars in 2016. Nevertheless, plentiful money supplied by parent company Geely puts Volvo in a much better position to achieve its dreams.