Chevrolet Volt Tax Credit Scandal
Article posted below. Are you outraged or indifferent? Should the practice be stopped, and by whom?
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This is the full article.
Are GM Dealerships Gaming Chevy Volt Tax Credit?
I recently set out to determine how honest General Motors is being when it claims that demand for the Chevy Volt is exceeding supply. It was not hard to discover that this is not the case as retail sales remain dismal. A web search on vehicle locator sites such as Autotrader and Cars.com exhibit sufficient supply of the Volt, one dealership within 70 miles of my location had six new Volts available for sale.
Even Ebay lists vehicles, many had no bids and one listing in Texas hadn't even met reserve with only one day of bidding time remaining. But I discovered something far more disturbing during my search. Many Volts with practically no miles on them are being sold as "used" vehicles, enabling the dealerships to benefit from the $7,500 credit supplied by the American taxpayers on each car. The process of titling the Volts technically makes the dealerships the first owners of the vehicles, which gives them the ability to claim the subsidies. The cars are then offered to retail customers as "used" vehicles.
The practice of dealerships purchasing from one another is not uncommon. "Dealer trades" are done all the time in the industry. What is very unusual is for the receiving dealership to be able to maximize profits at the expense of taxpayers by claiming tax credits of $7,500. It is also very rare for dealerships to part with any model that has higher demand than supply, as GM claims is the case with the Volt. In addition to qualifying dealerships for a $7,500 tax subsidy, the titling process also allows GM to record Volt sales even if the cars are sitting on dealership lots.
While most of the dealerships offering "used" Chevy Volts for sale are Chevy dealers, I also found other manufacturers selling Volts with low mileage as "used" cars. A Kia dealership in California that I contacted seemed to suspect that they were doing something a bit underhanded when I called them to inquire about a "used" Volt for sale with only 30 miles on it. After I identified myself as being an associate with the National Legal and Policy Center, I was placed on hold. I was then told by a sales manager that the Volts offered at that dealership were rental cars with higher mileage on them. I later called the same dealership back posing as a potential customer and confirmed that a "used" Volt with only 30 miles on it was available. This also raises the question of why GM or Chevy dealerships would be selling Volts to other manufacturers' dealerships when they claim that there are not enough of the cars to meet retail demand.
A Chevy dealer in Chicago was more upfront with the info given on a "used" Chevy Volt with only 10 miles on it. The vehicle was being offered at MSRP. When I asked if I was eligible for the $7500 tax credit, I was told that I probably wasn't since the dealership was applying for the subsidy. This practice is one of the more egregious abuses to date purloined upon taxpayers as a result of the GM bailout. The intent (even if misguided) of the $7500 tax credit offered on the Chevy Volt is to encourage consumers to buy "green" vehicles, not to offer an opportunity for dealerships to game the system and maximize profits at the expense of the taxpayers. I also suspect many purchasers of "used" Volts will attempt to claim the $7500 tax credit for themselves, thus bringing the total tax subsidy on such transactions to $15,000 if not disallowed by the IRS.
General Motors should act immediately to stop the practice of dealership to dealership sales enabling the pilfering of Chevy Volt tax credits. I would go one step further and say that IRS requirements for taking green vehicle tax credits should be changed to eliminate the credit for businesses. Clarification should also be given on whether companies like General Electric will be allowed to take millions of dollars in taxpayer subsidies when they purchase thousands of Chevy Volts. It certainly would not be unprecedented for Treasury to change IRS code; they have made more complex changes as recently as 2009 to allow GM to benefit from a $45 billion tax loss carry-over credit.
Dealerships taking tax credits that were designed to benefit consumers is unacceptable. The practice should be stopped immediately, regardless of the desire of GM and the Obama Administration to do everything in their power to support the appearance of strong Chevy Volt sales.
http://nlpc.org/stories/2011/05/31/gm-admits-dealerships-are-taking-chevy-volt-t- ax-credits
Perhaps the subsidy should be reworded to only allow it for individuals/households or, to allow small businesses to take part should they want to, simply put a limit of 1 subsidy/entity/year. I think that's reasonable.
I find it interesting, too, as while the buying dealerships may realize the short-term profit from the $7500, they still have to sell the car. They must be operating under the assumption that demand is sufficient that the car will sell at something close to MSRP even without the subsidy. Otherwise, if the car is a true sales dud, they may not make back their investment even after the $7500.
As with every tax regulation, if lawmakers (inadvertently) leave a loophole, you can guarantee that someone will leap through it.
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I would like to see GM at the very least verbally address this issue.
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Wouldn't that be construed as "tax fraud" because the tax credit was designed for the CONSUMER of the car. To "steal" the credit then not take that credit off the price seems like straight up TAX FRAUD.
I suspect people would be better served looking at the money spent by the government folks on Fannie Mae and Freddy Mac. But I'll go along for a minute here.
The hatred here seems to be following up on the number of sales of the Volt. Those sales were limited to certain states and to my knowledge still are limited. I looked in lower Michigan so I could see a Volt when we go visit. None of the dealerships in the area showed a Volt.
I did find a used one in Columbus, Ohio. It is clearly described by the Chevy dealership as NOT for sale (sorry to bust your bubbles here). They got it from a dealer in California to have one for people locally to see.
As for a dealer purchasing a Volt solely to claim the $7500 tax credit, has that been documented?
Are we going to talk about the Prius subsidies from our own government by tax credits to purchasers for years? Even though the auto maker is not a US company? How is that different than the US government giving a tax credit for an electric-based vehicle if it happens to come from GM? Were any Prius' sold to other dealers who took the tax credit? We need a thorough investigation of this now.
I still suspect the motive behind this is the general attitude toward GM that keeps on going and going like the energizer bunny--which is electric too, just like the Volt.
2014 Malibu 2LT, 2015 Cruze 2LT,
Other sources don't go for it
Or simply pick it apart
As I thought about it, I did wonder how such a scheme could sustain itself long-term. I mean, the only consumer who would buy a used Volt, with no tax credit, at close to MSRP would be a part of the "I must have it NOW" crowd - and there can't be an abundant supply of people who are so eager to get the vehicle that they're willing to forgo getting a new car (with full warranty and tax credit) just because they might have to be on a waiting list.
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With tough times like today, getting away with 4 or 5 tax credit thefts would probably suit some of them just fine.
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First 5 months of 2011 Chevy has sold a total of 2184. Probably half to other dealers. Time to end the program and give US our $billions spent on R&D for the Volt.
But, as soon as the all electric Volt arrives, the concept will be raved about by these same people and "range anxiety" will be an just an exaggeration...
Btw, I am a member of C&G, GMI and a few other GM boards so I read this stuff alot.
Car shoppers know there is a 7500$ tax credit.
We will subtract it from our offering price or lease-payments no matter whether seller calls the Volt used or new.
over time, as the cars get more used, the buyers will pro-rate/subtract a lesser portion of the $7500 from their offers.
John O'Dell ferrets out the facts. "The column by a blogger for the National Legal and Policy Center was more about politics than fair play.
it would be illegal for a dealer who bought and registered a new Volt, collected the credit and then sold the car as a used vehicle to tell the new owner that he or she would get a tax credit. We've combed the Internet looking for complaints about that kind of nefarious behavior and haven't found one example yet. The tax code also says that tax credits for advanced technology cars like the Volt – as well as the Nissan Leaf and Tesla Roadster -- aren't to be claimed if the new-car buyer purchased the car just to resell it."
No laws are broken, but trust between dealerships and buyers has fallen to a new low.
There were many on the hybrids. Anyone getting put in the AMT bracket was not allowed the tax credit. Same for the first time home buyer tax credit. So if the dealer takes the tax credit and then sells the car at a price less the credit. He has actually done the buyer a favor. I have hesitated to buy anything with a tax credit as about every other year we end up in that horrible AMT category. 29.3% of households in the $75k to $100k were subject to AMT last year. That is a lot of the people likely to buy a hybrid or EV.
When considering the economics of buying a hybrid car, a shopper’s first best question has nothing to do with gas consumption, maintenance costs, or resale value. Surprisingly, the most important dollars-and-sense consideration is whether or not you pay the Alternative Minimum Tax (AMT). The answer to that question will determine if you qualify for the federal hybrid tax credit—a few hundred dollars or a couple of thousand dollars, depending on the vehicle purchased and when you buy it.
Unfortunately, many of the consumers most likely to buy a hybrid—prosperous but not ultra-wealthy families with kids and mortgages—are the most likely to pay the AMT. Therefore, a core group of hybrid shoppers will not receive the well-publicized tax credit. This loophole calls into question the federal government’s ability and commitment to encouraging consumers to conserve energy by purchasing a hybrid.
Still no evidence of that eh?
I would not be surprised if GM intervined and delayed some dealers alllocation that are practicing this credit game. As a saleman who is on the right of issues it is hard for me to support them since they were bailed out. I will say however the Volt was being designed well before the current administration. The Cruze is a great small compact car, the 2013 Malibu is sure to set fire, and the Volt is awesome technology. I hope GM does the right thing regarding this issue.
http://townhall-talk.edmunds.com/direct/view/.f2315b9/10#MSG10
http://townhall-talk.edmunds.com/direct/view/.f2315b9/20#MSG20
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:confuse:
The excuse back in August was that 500 were sent to those dealers as demos. Now that the inventory has almost tripled, the Volt is looking more like the sales dud as it was originally projected... :shades:
Actually now in most states - Chevy's goal was national distibution by the 4th quarter of this year.
The excuse back in August was that 500 were sent to those dealers as demos. Now that the inventory has almost tripled, the Volt is looking more like the sales dud as it was originally projected
So there weren't any to sell and that makes it a dud??
According to this link:
http://gm-volt.com/2011/08/03/after-a-necessarily-slow-july-volt-sales-poised-to- - -increase/
Chevy built 4000 Volts for the 2011 model year with 3200 being sold and about 700 used as demos/test units. That sounds like almost a sellout. Volts spend about 13 days on the lot before selling. That's a dud??
For the 2012 model year, they have the capacity to build 60K. The plant just came back on line at the beginning of August.
There were plenty of them to sell. I've watched the success/failure of the Volt since it first came out and the inventory had risen to 500 -600 or so units available until the July. I also don't believe the "demo units" story either because these units were listed for sale like any other vehicle would be. Nothing about them being demos or they shouldn't have been listed IMO.
At the end of July, GM shut the plant down for "re-tooling", knocked a thousand bucks off the base price of the 2012 models and started off August with about 530 units (2011's). Here it is the first week of september and that inventory has tripled to over 1500 units (another 100 since just yesterday) while the forum shills and Government Motors keep saying the car is impossible to get because it's so wildly popular.
B.S. :sick:
And even with the same shills contaminating forums with "range anxiety" fear mongering, the Nissan Leaf continues to pull away from it in sales...
Chevy built 4000 Volts for the 2011 model year with 3200 being sold and about 700 used as demos/test units. That sounds like almost a sellout
The original plan was for 10k units in the first year...
"we wanted to share this quote from Government Motor's Rob Peterson:
The Volt production launch is on schedule to build and sell every one of our 10,000 units this year."
So even if they moved 4000 of them through demos, fleets, government agencies, test mules, etc, I'd say that is way off mark which is why I called it a dud.
I especially liked the logo and am hoping GM's next electric car is named Ampere or Nikola.
I tried to consider Volt for recent purchase, but the gas-only version offered such a better value...
The demo unit is not a sham. In order to maintain allocation you have to have a Volt in demo service for 6 months. You are free to sell it prior to that and lose allocation for 6 months. That is why some dealers still list it as for sale. It may be there only one so they need it to draw in customers and line them up for an order or wait for the demo to come out of service.
There are now more than twice as many Volts for sale than there are Honda CR-Z's, 4 times more than Honda Insights and only 350 units away from the supply of Honda Fits out there...
The Insight and CR-Z aren't exactly setting sales records so Honda is smart to not have too many in stock. The Fit is a mid volume car in the midst of model year changeover.
We get it - you don't like the Volt.
And yet the arrogance continues...
Following the Volt’s prize-garnering lead, this month the Vauxhall Ampera was awarded “Green Car of the Year” by one of the UK’s leading automotive magazines.
Looking at number of product in stock only would show the Camry and Accord are poor sellers.
Further, 1/3 of the country - including hybrid happy New England - just got the Volt. I say reserve judgement for at least a year in the full market before we start calling it a failure.
I don't follow... Where does the Accord and Camry come into the argument? They're not even competitors for the Volt. :confuse:
And if they are poor sellers based on stock, then having twice as many Snuzes and nearly twice as many Rentabu's on the lots must be gawd awful? :confuse: Maybe Gubmint Motors needs to crank up the fleet sales higher than they are now...
Regarding the Volt, it's looking quite clear that supply is easily outpacing the demand... And the fear mongering that was/is being spread to owners of Nissan Leaf models about "range anxiety" doesn't appear to be working either...
I was making a comparison. Units in stock doesn't tell the whole story. The more important number is average days to sell.
What I meant was if you were to look at the number of Accords/Camrys in stock, would you also say they were poor sellers? There are over 12K Camrys in stock nationwide - does that indicate poor sales?
Will the Chevy Volt Succeed?
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Most of us understand your first response and agree. the VOLT is getting bad press in some places due to the fact that most reviewers look to europe and asia for being the place of quality... Biased opinion is hard to accomplish and should be left to the professionals!!!
I consider my self an American and defend our industrial and technical industry to the end. If all would do the same we indeed would prosper as a whole.