General Motors Company GM has decided to stop the production of the Chevrolet Volt for four weeks over the June–July period. The decision is aimed at clearing the backlog of unsold vehicles created due to low sales as well as to modify the plant for the production of the 2016 Volt and the new Cadillac CT6. The 2016 model year Volt will be produced from July and should be available at dealerships, September onward.
The Detroit-Hamtramck plant, which produces the Volt along with four other cars, is expected to continue operations during June and July. The production of the Volt will halt before the holiday on Jul 4, for which the plant usually shuts down for two weeks.
This year, the sale of electric and hybrid vehicles has been hurt by the plunge in gas prices. This has affected the sales of the Volt as well. Only 1,874 units of the hybrid vehicle were sold in the first quarter of 2015, representing a year-over-year decline of 48%.
Consequently, dealerships have a large inventory of unsold Volts. Per Chevrolet, there is an inventory pileup that is adequate to supply for 100 days in California, the largest market for the Volt. This is significantly higher than the normal level of 60 days maintained by the company.
Apart from the Chevrolet Volt, other electric and hybrid vehicles, including Nissan Motor Co. Ltd.’s NSANY Leaf, are also being affected by the declining gas prices. However, the scheduled launch of the 2016 Volt could be a contributor to the slow sales of the current version.
General Motors currently carries a Zacks Rank #2 (Buy). Better-ranked automobile stocks include Gentherm Incorporated THRM and Wabash National Corp. WNC, both sporting a Zacks Rank #1 (Strong Buy).
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