Dan Akerson Says First Year Sales Of Volt As Good As Prius, Grows Long Nose
The repeated stoppages of the Volt production triggered rumors that GM might discontinue the Volt altogether.
Dan Akerson himself had to come to the rescue of the embattled plug-in. Saying that “we are not backing away from this product,” Akerson promised more advertising and less volume. So far, so good.
Then, Akerson did something really bad. Surprisingly, Akerson used Toyota as a benchmark and reportedly said that “Toyota sold about the same amount of Prius in its first year as the Volt in its first year.”
Utter nonsense.
- The Toyota Prius was launched in Japan in December 1997. In its first year, the Prius sold some 18,000 cars.
- The Chevrolet Volt was launched in the U.S. in December 2010. In its first year, the Chevrolet Volt had sold some 8,000 cars. That would be less than half of what the Prius sold in 1998.
It gets worse.
- The Prius was launched in Japan only and was not sold in other markets until the year 2000. In 1998, the market in Japan was 5,9 million cars.
- The Chevrolet Volt was launched and sold in the U.S. In 2011, the size of the U.S. market was 12.8 million units.
In the first year, the Volt sold half of what the Prius had sold in the first year. And that in a market twice the size.
It gets worse.
- The Prius was launched when the barrel of oil was practically given away. The barrel of crude did cost $11.91 in 1998. Only 1974 was it cheaper. Alright, inflation adjusted, the barrel did cost $16.50 in 1998. Inflation adjusted, that was the lowest price since World War II. As we all fondly remember, that was not the time to spend a lot of money to save cheap gas, especially not at the end of Japan’s lost decade.
- When the Volt was launched, the price of oil was exploding. The barrel of crude did cost $87.04 in 2011. Saving fuel had turned into a doctrine.
In the first year, the Volt sold half of what the Prius had sold in the first year. And that at a time when gasoline did cost twice as much as when the Prius was launched.
If Akerson would know more about cars, then he would not have to tell lies. He also would know that Toyota had been terribly unhappy about the initial sales of the Prius. What should give Akerson further pause are rumors from Toyota that sales of the plug-in hybrid version of the Prius, launched in Japan in January, are not going well. There are no numbers available, but all I am hearing is that the Aqua/Prius C compact hybrid is selling like hotcakes, while the plug-in Prius is collecting dust. Again from what I am hearing, people balk at the price. The regular Prius in the G trim costs 2,520,000 yen ($30,000) in Japan. The G-trim Prius plug-in hybrid costs 3,400,000 yen ($41,000). All prices including tax.
People seem to shun the plug-in, and instead go for the Prius, or its smaller sibling the Prius c. That one costs 1,850,000 yen ($22,000) in the G trim. The Prius is Japan’s best-selling car, the Aqua / Prius C has become Japan’s third-best-selling car right out of the gate. Price is a big driver of the success of a car. Price is the biggest problem of the Volt. Even with a generous (and unsustainable) subsidy, it is way too expensive. The example of the Prius Plug-in Hybrid proves an old adage in the business: People may swear up and down that no price is too high when it comes to the environment. Once in the showroom, they buy the car that makes sense.
Oh, and back to Akerson. I know how to get him out of this. He should say he was misquoted. He should say he meant calendar year. Launched in December 1997, the Prius sold 323 in that month and year. Launched in December 2010, the Volt sold 326 in that month and year. I know, it’s a lame excuse, but it beats being called a liar.
Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.
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I have to say that this is IMHO a tempest in a teapot. Bertel has indeed over-reacted to a throw-away remark by a CEO who probably heard the remark from someone at a meeting and seized on it as a talking point -without any actual detailed knowledge of the context of the remark beyond the raw numbers. If someone had called him on it on the spot, he'd have stumbled and turned to his staff. Anyone who has done staff work for one of these guys knows how that is. To lie requires intent to deceive. To misinform only requires ignorance. I used to just hold my breath and wait everytime my boss spoke in public. Unless he was throughly briefed (read trained and drilled) he might come out with any damned thing. I would tend to dismiss this as puffery, and frankly irrelevant. The circumstances of the two rollouts vary too much to be comparable, and even if they somehow were, what useful knowledge could you gleam from it? One might say that it shows that one or two years of saales data tell you nothing about the long term viability of a car in the marketplace. Some see sales grow from nothing (Corvette) and others see good initial sales vanish (Vega). Ain't tellin' till you roll those dice for a few more model years.
This parsing stuff is fun and all, but it would be more helpful to address with the substance of Akerson's comments. Akerson is saying that the Prius had a slow US launch. He's right -- it took years before the Prius ever hit the sort of volumes that would be considered to be mainstream for a compact car that lacks luxury branding. The substantive question to ask is whether this is a good comparison, i.e. whether the Volt will ever achieve the sort of sales volume in the US that the Prius eventually did. For a variety of reasons, I expect that the answer to this will prove to be "no". But that's going to be difficult to talk about if SOP is going to be to denounce Akerson as being sort of conniving liar, when perhaps he should be just taken to task for being unduly optimistic.