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Uh oh, guess I should have bought the "GAP" insurance.....

http://nlpc.org/stories/2014/08/07/chevy-volt-resale-values-plunge-lease-returns-hit-market

National Legal and Policy Center
Submitted by Mark Modica on Fri, 08/08/2014 - 10:40

It has been two years since General Motors admitted that there was little demand for the Chevy Volt (as reported here) due to there being "no plug-in market." Their answer was to "create market" to drive sales for the politically popular but economically-nonviable Volt. GM manipulated sales for the Volt through the use of subsidized leases at a time when President Obama's favorite, green wonder-car was being criticized for low sales as it failed to live up to the early hype.

GM was able to use taxpayer money in the form of electric vehicle tax credits to help drive down costs to lessees. Taxpayers chipped in $7,500 for each Chevy Volt placed on the road for terms as low as two years. The taxpayer subsidies, along with inflated residual values and other GM incentives, provided for low monthly lease payments and led to a full two-thirds of all Volt "sales" being attributed to leases. That's about three times the lease rate for the overall industry.

So, what happens to resale values of vehicles with little mass appeal that are forced upon the public with subsidies and manipulated leases? The result was predictable; those leased vehicles are now being returned and resale values are plunging. Having won many awards in the past, the Chevy Volt is now the front-runner to be the recipient of the highest depreciating vehicle award.

A search on the Manheim auction site, a primary indicator of vehicle wholesale value, shows that 81 Chevy Volts, model year 2012, were sold at auction for the week ending August 2nd. The average price was $14,871 for vehicles that are only two or three years old, primarily coming off of the manipulated leases. That equates to an absurd loss of values for Chevy Volts of about 65% in only two or three years based on the list price, which was about $40,000 at the time of sale.

To quickly review how lease terms are calculated, lessors (in the case of GM vehicles that would have been crony, government-owned financial company Ally Financial) set the residual values for vehicles at the expected time of lease termination. The residual value is the amount of money the lessors expect to receive when they have to sell the leased vehicles after they are returned. The lessee pays the difference between the original price of the leased vehicle and the residual value, plus a small lease rate. The higher the residual value, the lower the monthly payment.

So, we now have Chevy Volt resale values suffering as a result of lack of demand and manipulated leases. Financial institutes that lease Chevy Volts to consumers will need to recalculate residual values lower to reflect market conditions. At least they would in a free market devoid of political intrusion. GM and/or Ally Financial will have to absorb losses for the Chevy Volt lease returns that sell for less than the original residual values. The already low sales numbers for the Volt will be hurt if leases stop being manipulated through the use of artificially high residual values and politically-driven incentives. The supply of low-priced, two year old Volts on lots will not help new sales either.

The Chevy Volt fiasco has been one more example of how government should not intrude upon industry and free markets. The Volt obviously had political roots as it was thrust upon the public with media-driven hype that it was to be a savior for GM and the answer to America's reliance on foreign oil. The wonder-car was to save us from terrorism and global warming all at once!

The management at GM was, and still is, reluctant to admit that the Volt has been an utter failure. The slim demand would have been even slimmer without GM "creating demand" as it loses thousands of dollars on each vehicle. GM management tried to deceive the public by blaming low sales on a lack of supply, even as it became evident that the demand did not exist for the car that President Obama said he will buy in just two more years.

I do not expect GM to back down from its strategy to focus on money-losing green vehicles like the Volt. In fact, GM is doubling down by offering a Cadillac version of the Volt, the ELR. Not surprisingly, that car is also a failure at double the price of a Volt.

Those who outright purchased their Chevy Volts will lose out on the high depreciation but there may be beneficiaries as those looking for a good deal on a Volt now have a supply of low-priced, used models to choose from. And President Obama can get some consolation in knowing that he should be able to get a heck of a deal on a two year old Chevy Volt when he leaves office.
 

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I question any article from a site labelled "National Legal and Policy Center". The article seems very politically motivated especially considering there is more political criticism in there than anything else. This article is as much "Blame Obama" as it is Volt depreciation. I own a 2013 Chevy Volt and my intentions were to keep it until it falls apart and judging from one of the other threads about someone having a Volt with 100,000 miles on it used and probably abused as a GE fleet vehicle considering they have worn out brakes, I would say the Volt seems like it will hold up. The other thing is in my city, there's so far only 1 Volt, mine oddly enough which means it is a rare vehicle. This alone should give it a bit of value should I ever decide to sell it which I won't. If anything, I think only the Volt 2 will realistically depreciate it.
 

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Uh oh, guess I should have bought the "GAP" insurance.....

http://nlpc.org/stories/2014/08/07/chevy-volt-resale-values-plunge-lease-returns-hit-market

National Legal and Policy Center
Submitted by Mark Modica on Fri, 08/08/2014 - 10:40
https://gapdirect.com/

Its never too late to get the 'gap'!:cool: I actually opted for the gap protection offered during purchase of the Volt and it did cost a bit more but came with no deductible. Lets hope none of us would actually have to use it though!;)
 

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The guy is a bit off. If you want to blame someone, George Bush is the guy. He signed it into law and I for one applaud him for it. The world is changing, Modica should learn to accept this.
 

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Uh oh, guess I should have bought the "GAP" insurance.....

http://nlpc.org/stories/2014/08/07/chevy-volt-resale-values-plunge-lease-returns-hit-market

National Legal and Policy Center
Submitted by Mark Modica on Fri, 08/08/2014 - 10:40


GM was able to use taxpayer money in the form of electric vehicle tax credits to help drive down costs to lessees. Taxpayers chipped in $7,500 for each Chevy Volt placed on the road for terms as low as two years. The taxpayer subsidies, along with inflated residual values and other GM incentives, provided for low monthly lease payments and led to a full two-thirds of all Volt "sales" being attributed to leases. That's about three times the lease rate for the overall industry.
I think that it would be more fair to say that the taxpayer is keeping $7,500 of his money that he would otherwise have to pay the IRS as a tax on his earnings. He is able to make that money do something useful for himself, rather than to have to pay it to the Feds, who would otherwise piss it away on run-away defense spending, or a bridge to no-where, a study on some asinine topic, or some other pork spending.

It really makes me mad that there are people such as the OP who believe that we have the moral obligation to give up our hard earned money to the Feds so that they can spend, spend, spend, and that the Feds are giving us a break by letting us keep our money so that we can benefit ourselves by purchasing EVs. The money belongs to us, not the Feds.
 

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A quick Google seems to indicate it's a conservative think-tank and the author appears on FOX. Agree or disagree with that point of view, the article does appear to be agenda/politically motivated.

for example: http://www.thetruthaboutcars.com/2011/06/volt-scam-debate-misses-the-point/

Also enter his name into their search bar. Just found that one with Google, no direct knowledge of that group either.

What is they say about agenda/lying/propaganda (right, middle, or left), sprinkle in just enough truth to make it believable.
 

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I question any article from a site labelled "National Legal and Policy Center". The article seems very politically motivated especially considering there is more political criticism in there than anything else. This article is as much "Blame Obama" as it is Volt depreciation.
+1
This article is so tainted politically, I give it a zero value.

He keeps promoting "a free market devoid of political intrusion", seemingly forgetting where this took the world's economy back in 2008..... as well as forgetting to point out where GM (and many other institutions) would be today, was it not for "government intrusion".

I'm sure he advocates keeping sucking up gasoline until nothing is left and THEN think about a plan..... Sadly short sighted propaganda, and typical "Faux News" crap.
 

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Very sad. Very strange. The Chevy Volt is an example of how government shouldn't intrude on industry? Funny since had the government not acted GM wouldn't exist and we'd be in the middle of a depression not complaining about how weak the recovery from the recession was. You might also wonder about how the government forced GM into making all those Hummers and Saabs and Saturns. :p

Other than the fact that he can't seem to add and that he tends to cherry pick the numbers, nothing really wrong with his analysis. The addition issue comes from not subtracting the tax credits and any relevant state rebates/credits from the MSRP. The cherry picking issue comes from using averages rather than medians. Apparently he believes that when Warren Buffet walks into a bar every patron truly does become a millionaire.

The truth is more or less the opposite of what he's claiming as far as resale is concerned. AFAIK the retail price of a used Volt still isn't much different than the price of a new one minus the tax credit, which is pretty incredible. For example, the ballyhooed Tesla buyback program is based on 43% of the base MSRP, which Tesla says is the standard industry depreciation rate. New cars depreciate. Who knew?
 

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After the tax credit I can buy a base Volt for about $24k. Used price for a 3 year old (not auction price) is about $17k. That's not bad since in 3 years I also saved $3k in gasoline.
 

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Mark is a well-known GM and Volt hater. He twists whatever news there is to make it negative. You'll not find a single positive article on the Volt coming from him.
 

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This "article" is nothing more than a politically biased hit job. Agriculture, oil and healthcare receive massive subsidies and payments from the government. I also find it ironic that a "fiscal conservative" is arguing against a tax credit.
 

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Discussion Starter · #13 · (Edited)
I just called my insurance company (USAA) asking about my insured value. Basically it's about $23k for a 2013 White Diamond Tricoat on Pebble - Safety 1 & 2 ~ Nav & Bose. I have only had it 1 year so I still owe $35k (Stickered at $46k I think and I got the $5k factory rebate and paid like $38k after factory rebate and dealer discount, but had neg equity trade so I financed $41k). I asked about refinancing, but they will only finance the $23k value. So I am mega upside down (not that I plan to sell, but if I get t-boned I will owe $12k to my finance co.). I needed the tax credit so I wasn't able to take the $7500 and "re-amoritize" the balance which still would have me upside down I guess, but just not as bad.

I had no plans of selling, but it does suck that the value is so pitiful on the secondary market. I am only worried about "the other guy" (hitting me) now I guess. Even with 20k miles in my first year, I am still averaging 85+mpg driving a good daily mix of about 60 miles-ish. Couldn't do that in any other car $40k or less!
 

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Mark is a well-known GM and Volt hater. He twists whatever news there is to make it negative. You'll not find a single positive article on the Volt coming from him.
Of course! Anything involving "Science" and "Research" towards "Progress" is to be destroyed for him and his political interests.
What he and his friends want, is go back to the early 20th century, not tackling the 21st.
 

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Volt in 2011 or 2012 was definitely a car to lease, not buy. Lease deals were definitely more favorable. However, this is like the stock market, hard to predict.

What turned me away from the BMW i3 is how low they set the residual values for the lease, making the lease payments as much as purchase payments. They are probably being more realistic, but it makes leasing the i3 not a great deal. I figured leasing an i3 for 3 years would be similar to what I would pay to buy a 2 or 3 year old very low mileage Volt (less than 10k, so new as far as I am concerned), but I can keep the Volt when I am done paying for it vs the i3 I would have to buy or let go. The Ford Energi models have fairly attractive leasing prices as well.

The piece definitely appears to be a writer with an bias against GM/Volt, reads like an opinion piece. Trying to say "I told you so".
 

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...little demand for the Chevy Volt (as reported here)
...
due to there being "no plug-in market."
...
Their answer was to "create market" to drive sales
...
politically popular
...
economically-nonviable

manipulated sales
...
subsidized leases
...
President Obama's favorite
...
green wonder-car
...
failed to live up to the early hype
...
taxpayer money
...
Taxpayers
...
taxpayer subsidies
...
inflated residual values
...
politically-driven incentives.
...
fiasco
...
government should not intrude upon industry and free markets
...
political roots
...
thrust upon the public
...
media-driven hype
...
wonder-car was to save us from terrorism and global warming all at once!
...
utter failure
...
loses thousands of dollars on each vehicle
...
GM management tried to deceive the public
...
also a failure at double the price of a Volt.
...
President Obama can get some consolation in knowing that he should be able to get a heck of a deal on a two year old Chevy Volt when he leaves office.
Warning: TEAbagger-like typing detected. Why are you reading, much less discussing and reposting, this conservative tripe?
 

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Discussion Starter · #18 · (Edited)
https://gapdirect.com/

Its never too late to get the 'gap'!:cool: I actually opted for the gap protection offered during purchase of the Volt and it did cost a bit more but came with no deductible. Lets hope none of us would actually have to use it though!;)
Nice! Thank very much! Unfortunately they can't sell in the Sate of Oklahoma yet.... :(
 

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All political bitterness aside, $14,871 is about right for wholesale. After state and national rebates and tax incentives, a new 2015 is around $20K. A $6K (30%) depreciation in three years is pretty good.

We do need to be careful not to confuse tax credits with depreciation. Tax credits are part of public policy and subject to debate. However nobody consumer actually paid $40K for a Volt, so you need to make sure that the actual price paid post-credits is used when factoring in depreciation.
 
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