Another Setback for GM's Chevy Volt

General Motors Co.’s (NYSE: GM) reaction to a report that it would idle production of the troubled Chevy Volt was: “We don’t comment on production schedules. We continue to match supply and demand,” according to Automotive News. Spokespeople for the world’s largest car company also said the Volt plant was needed for the manufacture of a new model Impala. But GM could not disguise its problem. Almost no one wants to own a Chevy Volt. The car has been a failure since it was first introduced.

GM’s management suffers from the same disease that many big company managements do. They do not like to tell the truth about their failures in public. They must think that such admissions will make them appear weak, or even stupid.

The Volt was launched as GM’s car of the future. That future never came. While sales of hybrids like Toyota Motor Corp.’s (NYSE: TM) Prius continue to surge, GM cannot get consumers to buy a vehicle that plugs in like a toaster.

Wall St. and the press would think much better of GM if it would confess the Volt blunder. It would be the start of a better relationship with both groups. Investors and the press believe that GM is not forthcoming about its largest problems — in Europe — either. All that people can observe from outside the situation is that GM continues to cycle through executives in Europe at a rapid pace. As GM’s problems multiply, so does the secrecy around them.

With the Volt, GM’s senior executives want the world to think that the company has expertise in “inventory” control. Volt demand will rise soon and the production pace for the electric car will pick up. In reality, the Volt is just one of scores of cars that manufacturers around the world launch that are almost immediate failures. New cars and light trucks that move to the top of the sales volume list are rare. Old vehicles like the Ford Motor Co. (NYSE: F) F-150 and Honda Motor Co. (NYSE: HMC) Accord are best sellers, although they were first introduced decades ago.

GM should shut down Volt production permanently. There may be demand for an electric car sometime in the decades ahead. GM is just pretending that there is demand now.

Douglas A. McIntyre