The Chevy Volt in China

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GM exported the first Chevy Volts to China earlier this year. A PR video Faces of GM touts the electric vehicle as a perfect fit . The subtle message is that the newly restructured, profitable GM is–thanks to the bailout–actually creating American jobs by exporting cars to China. But there’s a lot GM is not telling you.

Volt sales have been flat so far in the US. Washington recognizes that the Volt’s 40K MSRP is a bit pricey in the US and even offers a $7500 bribe to taxpayers who buy one. The sticker price in less-affluent China is $79,000. Don’t expect many of these to roll off the lot in Shanghai, especially at this price.

GM is one of the top foreign automobile manufacturers in China, selling about 227,000 vehicles there through its joint ventures in April, compared to about 213,000 in the U.S. I certainly don’t mind production and sales in other nations, but a recently filed GM document titled Global Assembly Footprint forecasts that 80% of its production growth over the next 5 years will occur in low-cost countries like the BRIC (Brazil, Russia, India & China) nations and Mexico. Moreover, the Chinese government is pressuring foreign carmakers to share technology and produce vehicles with a Chinese brand. While other carmakers have attempted to resist, GM was the first to comply by introducing the Baujun brand with Chinese partner SAIC last year.

Here’s my problem: Taxpayers financed a bailout and GM responded by producing more cars abroad, sharing technology, and launching a Chinese brand. Executives even plan to export cars back to the US in a few years. GM has already benefitted from CARS (Cash for Clunkers) and other government “incentives,” and Obama is calling for an increase in the Volt tax break to $10,000. To add insult to injury, a special TARP provision means that pre-bankruptcy losses can be counted against future profits, resulting in a potential additional taxpayer drain of as much as $45 billion down the road.

If you’re looking for a definition of crony capitalism, you’ve found it.

6 Comments

6 Comments

  1. Hopkins  •  May 7, 2012 @5:01 PM

    People don’t understand that GM would have survived without a bailout. They would have renegotiated their contracts and restructured without government money.

  2. jerry  •  May 7, 2012 @6:52 PM

    this is insane, why do we let stuff like this happen?

  3. COMMODORE  •  May 8, 2012 @8:38 AM

    This only tells one side of the story. Nobody likes bailouts but what would have happened if we let GM go under? There would have been a lot of lost jobs at GM, dealers, and suppliers. Without GM unemployment in the automobile sector would skyrocket. We were in the worst economy since the depression and had no choice.

  4. Jeff  •  May 8, 2012 @7:19 PM

    Hey Commodore…see Hopkins above.

  5. COMMODORE  •  May 9, 2012 @11:12 AM

    Hey Jeff…GM might have survived but they would have been too weak to function. The workers would have been screwed too. GM needed help and I’m glad the government stepped in to negotiate a deal.

  6. Aliza  •  May 10, 2012 @11:23 AM

    I read at the abc News that GM announced $1 billion profits in the first quarter of 2012 and that it has paid back $24 billion of the $50B it received from the government in 2009. The demand for GM cars in China is strong and GM translates that to profits. I think GM’s profit line shows that the bailout was justified. From a losing company in 2009 it became a profitable company in 2012.
    GM’s case reminds me of Joe Cocker’s great song: ”A little help of my friends” (in the government, lol) where he sings:
    Mm, I get high with a little help of my friends
    Mm, I’m gonna try with a little help of my friends…”
    And GM is in a higher position now, it tried hard and it works.