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Whenever I get frustrated with GM killing off another promising project, I try to be fair to them about what their motivations should be. GM doesn't mind selli
by freeopinion 5y ago
Whenever I get frustrated with GM killing off another promising project, I try to be fair to them about what their motivations should be.
GM doesn't mind selling a $40k car instead of a $33k car. What matters is volume x margin. You hit on the volume factor. I suggest that GM could have increased their volume dramatically by actually marketing the car. In my opinion they actively discouraged sales. They did not want to sell more of them. I think this points to a margin problem. Every hour of labor and every square foot of production facility given to the Volt was actually hurting GM. Not because the Volt had a negative margin, but because the Volt had a negative _relative_ margin.
If GM layed off every line worker/engineer/artist etc working on the Volt and closed every production facility that manufactured it, GM would have lost money.
But if they repurpose all that into the production of a 1/2-ton truck, they make more money than they do on the Volt.
If they repurpose it all into the production of the Bolt that sells for $40k, they make more money than on the Volt. You can argue that the Volt is 2x or 3x better than the Bolt. But that would be arguing from the wrong perspective. With a little marketing the Bolt should sell as well as the Volt (even at a higher price tag) and provide significantly higher margins. Same volume x higher margin = kill the Volt.