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GM’s Chevy Volt Misses 2011 U.S. Sales Goal as Safety Probed

General Motors Co. (GM)’s Chevrolet Volt missed its U.S. sales target of 10,000 cars in 2011, the company said. Chevy dealers sold 1,529 of the plug-in hybrids last month, leaving the brand 2,329 shy of its goal.

A slow production increase kept dealers in short supply until December, and a federal investigation of three fires that occurred after Volt crash tests lowered demand for the car, according to Bandon, Oregon-based CNW Marketing Research Inc. U.S. dealers sold a total of 7,671 Volts last year.

While the Volt had its best sales month yet, its December tally was less than half of the 3,750 a month GM plans to produce starting this month. Even fatter Volt inventory in December didn’t help GM get near its sales target for the car.

“The story that GM gave us that Volt sales were constrained by supply doesn’t hit the nail on the head. It was constrained by demand,” said Jeremy Anwyl, vice chairman of Edmunds.com, an automotive research website based in Santa Monica, California. “GM asked the dealers to sell the demonstration models but it didn’t seem to make a difference.”

GM is expanding production to 60,000 Volts this year with 45,000 of them earmarked for the U.S. The Volt is being investigated by the National Highway Traffic Safety Administration because its batteries caught on fire in the weeks following three government crash tests. NHTSA announced a safety probe of the Volt Nov. 25.

Leaf Misses

Nissan Motor Co. also fell short of its target of 10,000 to 12,000 sales of its Leaf electric car. Nissan sold 954 of the Leaf in December to finish the year at 9,674 units.

The Leaf and Volt both will struggle to find many buyers when Toyota Motor Corp. (7203) has the Prius plug-in hybrid, which is cheaper than the Volt and requires no charge like the Leaf, Anwyl said. Also, gasoline-powered cars are getting more efficient and putting pressure on plug-in vehicle sales, he said.

“For most consumers, the category is defined by the Prius and the Prius is serving it pretty well,” Anwyl said.

December was the third month that Chevy dealers sold the Volt in all 50 states. GM allowed dealers to sell as many as 2,300 demonstration models to retail buyers starting in late November, helping spur a 2.8 percent increase from October and the model’s previous best month at 1,139.

Tough Sell

Chevrolet dealers may struggle to convince mainstream buyers that the car’s gasoline savings justify the $31,645 price after federal tax credits, said Jim Hall, principal of 2953 Analytics Inc., a consulting firm.

“It takes a tremendous amount of thought for buyers to understand the value of the Volt,” said Hall, who is based in Birmingham, Michigan. “The value is there but it’s a hard thing for Chevy to sell.”

The Volt investigation has the potential to harm the reputation of electrified vehicles. Lithium-ion batteries, such as those used in the Volt, are also installed in all-electric cars, such as Nissan (7201)’s Leaf and models made by Tesla Motors Inc. (TSLA)

A Volt caught fire three weeks after a May 12 side-impact crash test while parked at a NHTSA testing center in Wisconsin, leading regulators to conduct more tests.

The Volt can go about 40 miles on electricity before its gasoline engine kicks in and powers a generator to recharge the battery. The car has a range of 379 miles with electric and gasoline power combined. The Volt’s battery can also be recharged at an electrical outlet.

Extended Range

The U.S. Environmental Protection Agency estimated the Volt would average 60 miles per gallon in combined gasoline-electric driving, compared with 50 mpg for Toyota’s Prius. Volt’s range is about four times what Nissan’s Leaf travels on a single charge.

GM is trying to reassure customers. North America President Mark Reuss sent a letter to Volt owners on Nov. 28 saying that if they have concerns about their safety, the Detroit-based company will provide them with another model as a loaner until the U.S. investigation concludes. GM also is willing to buy back Volts from any owners who are concerned for their safety.

The Volt was the highest-ranked car in Consumer Reports’ owner-satisfaction survey, taken before the U.S. probe was announced. The magazine said 93 percent of Volt owners who responded said they would buy the car again. The plug-in hybrid finished ahead of the Dodge Challenger and Porsche 911 sports cars, each of which had 91 percent owner-satisfaction scores.

To contact the reporter on this story: David Welch in Southfield, Michigan, at dwelch12@bloomberg.net

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net

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