The Chevrolet Corvette may be outselling all of Porsche’s sports car models combined, but GM will still sell fewer Corvettes this year than the number of Chevy Cruzes they are likely to sell this month. You might think that one of General Motors’ lowest volume cars could not contribute much to the company’s bottom line, but the success of the 7th generation Corvette will mean hundreds of millions of dollars more in profit this year for the automaker.
When the latest Corvette was introduced in early 2013, annual sales had been in the 12,000 to 14,000 unit range since 2009, about a 2/3 drop from sales a decade earlier. I can remember when there were rumors in the 1990s that GM might kill the Corvette because sales had dropped to about 25,000 cars a year so it was somewhat surprising that the ‘Vette survived GM’s bankruptcy with sales at half that level.
At the C7’s introduction in January of 2013, I was talking to Harlan Charles, Corvette majordomo (actually his official title is product and marketing manager for the car) and he surprised me when he said that the program was profitable at the then current build rates. When I expressed skepticism and mentioned the rumored demise of the ‘Vette in the ’90s, Charles said that it wasn’t the 1990s anymore, that efficiencies had been implemented and that the Bowling Green Corvette assembly plant made money making a fraction of the cars it used to make. In 2012, Chevy sold about 14,400 C6 Corvettes in North America. The C7 edition has been well received and Chevy has sold more than twice that number in just the first half of 2014, 18,500. Unless something completely unexpected happens, the Corvette should easily surpass 30,000 sales this year and possibly exceed 35,000.
Mark Reuss, who is GM’s president for North America, has publicly stated that the ‘Vette “makes as much money as any of the top-profit models in our company.” Those pickups can represent five figures of profit on vehicles with higher transaction prices. Adam Levine Weinberg at The Motley Fool website takes Reuss’ comments to mean that gross profit per vehicle (not including development costs) on the C7 Corvette could be $10,000 or more. That means that the 20,000 or so additional Corvettes that GM will sell this year compared to last year works out to an additional $200 million in gross profit.
Now for a company that booked a net profit of $3.8 billion dollars last year, $200 million isn’t a huge amount of money, but it’s far from chump change. With Chrysler just introducing the 707 horsepower Hellcat edition of the Dodge Challenger, there will be pressure on the Corvette team to respond with a higher performance model than the 650 hp Z06 version of the ‘Vette. While that $200 million may be a fraction of GM’s total profits, it will certainly make it easier for Mr. Charles and his team to convince Marry Barra and her team to greenlight a ZR1 Corvette with even more power than the Hellcat.
Ronnie Schreiber edits Cars In Depth, a realistic perspective on cars & car culture and the original 3D car site. If you found this post worthwhile, you can get a parallax view at Cars In Depth. If the 3D thing freaks you out, don’t worry, all the photo and video players in use at the site have mono options. Thanks for reading – RJS