| 777 | Date: Thursday, 28 Oct 2010, 19.07 | Message # 1 |
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User ID: 777
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| General Motors skeptics have been loudly asking: Why would anyone want to pay $41,000 for the Chevy Volt? Fortunately, for fans of plug-in cars there’s a more pertinent question: Why wouldn’t you want to lease it?
Faced with its $41,000 base price, people had two natural reactions to Chevy’s plug-in hybrid. (Sorry, GM, but “extended-range electric vehicle” is confusing marketing jargon.) First, that the Volt is too expensive for mainstream buyers. And second, that it costs nearly $8,000 more than its Asian rival, the all-electric Nissan Leaf. But GM’s strategy is clear: The company doesn’t really expect people to shell out 41 grand, or even $33,500, which is the price after a $7,500 federal green-car tax credit. Instead, Chevy is luring shoppers, including people who would otherwise never touch its newfangled electric technology, with a sweetheart lease deal.
Jesse Toprak, vice president of industry trends for TrueCar.com, said that while the Volt’s purchase price is indeed out of reach for many middle-class consumers, the lease payments are not. At $350 a month for three years, with $2,500 down, the lease “takes the argument away that this is only a car for the elite and early adopters.”
Another key point: If you buy the Volt or the Leaf, you’ll be responsible for financing the full purchase price -- including that $7,500 tax credit -- along with the options, sales taxes and fees that push the typical Volt above the $45,000 mark. In other words, you’ll have to wait until you file annual income taxes to take that hugely generous $7,500 credit off your bill. In sharp contrast, when you lease these EVs, the car companies keep the title to the vehicle, which means they can deduct the $7,500 credit from the price. That dramatically reduces your monthly payment.
But even the tax savings don’t begin to express how heavily GM will be subsidizing lease payments for Volt drivers. Buy the Volt outright, with $2,500 down at 6 percent (don’t forget those sales taxes, title and fees) and you’re looking at a roughly $850 monthly payment over 60 months -- well more than double what GM will charge you to lease. Even when factoring in the tax credit you’ll receive down the road, you're still facing payments of $725 a month.
Though GM is boosting confidence with an 8-year, 100,000-mile warranty on the Volt’s battery, shoppers may still be leery of buying one outright, concerned over long-term maintenance or resale value. Lease the Volt (or the Nissan Leaf for that matter, at an equally attractive $349 a month) and you won’t worry about a thing. Not the price, not the battery conking out, not having to trade it in later.
“There’s less risk, far less cash outlay, an easier ownership experience, and you still get the new technology,” Toprak says.
Just as important, he adds, the sweetheart lease will bring potential buyers into a Chevy showroom who otherwise never would have set foot inside -- that is, people who would usually shop a Toyota or other import brand. GM also wins because most Volts will be back in company hands after three years, giving GM and dealers greater control over their lifecycle and the secondary market.
It all debunks the arguments of radio commentator Rush Limbaugh and others who have a knee-jerk negative reaction to GM, Detroit and electric-car technology. The Volt is nothing like the Tesla Roadster, which is essentially a $110,000 toy for the rich. At $350 a month, Americans who can afford a typical family sedan can also afford the Volt.
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