Wednesday, June 1, 2011

More On the Chevy Volt Taxpayer Debacle - Unintended Consequences?

No matter how you slice it, the Chevy Volt is a financial and environmental disaster. It is obvious that the Obama people have no idea what type of vehicle the people want or need. The Volt is essentially a high priced coal powered vehicle with an oil based backup engine made by a company controlled by the unions and subsidized by the taxpayers. Now that is our government at work for you and the environment.

I recently set out to determine how honest General Motors is being when it claims that demand for the Chevy Volt is exceeding supply. It was not hard to discover that this is not the case as retail sales remain dismal. A web search on vehicle locator sites such as Autotrader and exhibit sufficient supply of the Volt, one dealership within 70 miles of my location had six new Volts available for sale.

Even Ebay lists vehicles, many had no bids and one listing in Texas hadn't even met reserve with only one day of bidding time remaining. But I discovered something far more disturbing during my search. Many Volts with practically no miles on them are being sold as "used" vehicles, enabling the dealerships to benefit from the $7,500 credit supplied by the American taxpayers on each car. The process of titling the Volts technically makes the dealerships the first owners of the vehicles, which gives them the ability to claim the subsidies. The cars are then offered to retail customers as "used" vehicles.

A Chevy dealer in Chicago was more upfront with the info given on a "used" Chevy Volt with only 10 miles on it. The vehicle was being offered at MSRP. When I asked if I was eligible for the $7500 tax credit, I was told that I probably wasn't since the dealership was applying for the subsidy. This practice is one of the more egregious abuses to date purloined upon taxpayers as a result of the GM bailout. The intent (even if misguided) of the $7500 tax credit offered on the Chevy Volt is to encourage consumers to buy "green" vehicles, not to offer an opportunity for dealerships to game the system and maximize profits at the expense of the taxpayers. I also suspect many purchasers of "used" Volts will attempt to claim the $7500 tax credit for themselves, thus bringing the total tax subsidy on such transactions to $15,000 if not disallowed by the IRS.

General Motors should act immediately to stop the practice of dealership to dealership sales enabling the pilfering of Chevy Volt tax credits. I would go one step further and say that IRS requirements for taking green vehicle tax credits should be changed to eliminate the credit for businesses. Clarification should also be given on whether companies like General Electric will be allowed to take millions of dollars in taxpayer subsidies when they purchase thousands of Chevy Volts.

Read full article here.

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