Did this guy just kill the Chevy Volt?

[akirby]

Federal tax credits don't go to GM or Ford so they are irrelevant when you're discussing profits and business decisions. And they don't last forever.

 

Getting timely loans didn't save Ford. Bringing in Mulally and changing how Ford was managed saved Ford. Without Mulally even the loans would not have saved them.

[Anthony]

Curious (because I have no idea): What is the residual on the $199 Volt lease?

[RichardJensen]

53% after two years. The residual isn't being subsidized, the monthly payments are:

 

http://www.blueovalf...st/#entry799821

Edited October 18, 2012 by RichardJensen

[fordmantpw]

Saying can't is totally laughable.

 

Not quite as laughable as comparing a test mule to a production vehicle.

 

I guess if you don't want back seats in your production car it may be valid...

 

EDIT: Now that I have finished reading the rest of the thread and realized toybox can't post in the thread any more, I realize my post was pointless.

Edited October 18, 2012 by fordmantpw

[jpd80]

Federal tax credits don't go to GM or Ford so they are irrelevant when you're discussing profits and business decisions. And they don't last forever.

They do ya know, Govt tax credit of $7,500 for the Volt comes of the MSRP before cash sale or leasing. Edited October 18, 2012 by jpd80

[JasonM]

They do ya know, Govt tax credit of $7,500 for the Volt comes of the MSRP before cash sale or leasing.

 

Nope, that is incorrect.

[jpd80]

Nope, that is incorrect.

Uh huh, I just looked up how the tax Credit works:

 

Q2: If I buy a Volt today (5/4/2012), when do I get the credit back?

A2: You claim the tax credit on your 2012 Federal Taxes. So you won’t see the money until you get your refund in 2013 after you’ve filed your taxes.

 

Q5: Can I claim the tax credit on a leased Volt / EV?

A5: No the leasing company “owns” the Volt. They basically claim the credit and factor that into the lease payments. You benefit from the tax credit through lower lease payments.

 

Now it's becoming a lot clearer just how much GM is subventing the cost of Volts on 24 month lease at $199 or even $269/mth.

 

Even 0% financing for 60 months is one heck of a discount.

Edited October 18, 2012 by jpd80

[Anthony]

Uh huh, I just looked up how the tax Credit works:

 

Q5: Can I claim the tax credit on a leased Volt / EV?

A5: No the leasing company “owns” the Volt. They basically claim the credit and factor that into the lease payments. You benefit from the tax credit through lower lease payments.

 

Now it's becoming a lot clearer just how much GM is subventing the cost of Volts on 24 month lease at $199 or even $269/mth.

 

 

So you are basically leasing a high $20k car instead of a high $30k car?

[jpd80]

So you are basically leasing a high $20k car instead of a high $30k car?

And perhaps why GM wants everyone buying Volt on a lease...

 

I think leasing energi hybrids through Ford Credit will probably work similar

Edited October 18, 2012 by jpd80

[akirby]

And perhaps why GM wants everyone buying Volt on a lease...

 

I think leasing energi hybrids through Ford Credit will probably work similar

 

Yep - should work the same just with lower amounts. Although I think Ford had to change their leases in new york so that the customer actually has title to the vehicle (and I think they changed the name to Red Carpet Ownership instead of Lease) because new york started going after the vehicle's owner for unpaid parking tickets and for leases that was Ford. Not sure how that would work.

[Pioneer]

Is the tax credit for the Volt like what was available for the early hybrids? Does it go away after so many units are sold?

[RichardJensen]

Yep. But the threshold seems a lot higher. It begins to phase out after 200k units are sold

[Anthony]

So is the 53% residual on the full amount of the lease price after the tax credit?

 

Actually, better question is where can I lease a Volt for $199 today on the East Coast? Because if the residual is only $21k after the lease, I'll gladly buy one outright for $25k (2 years lease payments plus residual).

[akirby]

So is the 53% residual on the full amount of the lease price after the tax credit?

 

Actually, better question is where can I lease a Volt for $199 today on the East Coast? Because if the residual is only $21k after the lease, I'll gladly buy one outright for $25k (2 years lease payments plus residual).

 

I think they're calculating the lease normally with the 54% residual, then subtracting the $7500 credit from the lease payments.

[PREMiERdrum]

I think they're calculating the lease normally with the 54% residual, then subtracting the $7500 credit from the lease payments.

This is correct.

[Anthony]

I think they're calculating the lease normally with the 54% residual, then subtracting the $7500 credit from the lease payments.

 

That's still a Volt for $25k after all payments. I'd seriously consider it. My commute (and usage of passenger space) matches the criteria pretty much to a tee.

 

$40k * .53 = $21,200

199 * 12 = $4,776

 

Grand Total: $25,976

[RichardJensen]

And that right there shows you that GM is still laying a lot of cash on the hood of the Volt. Something in the neighborhood of $8k.

[Anthony]

And that right there shows you that GM is still laying a lot of cash on the hood of the Volt. Something in the neighborhood of $8k.

 

I can't find one of these $199 leases. I saw the same articles saying some people were getting it, but I don't see anything advertised except for a couple dealers out west with a limited number to sell (which have already expired or the infamous "1 available at this price!"). The lowest lease deal on the Chevy website is $299 per mo..... and nothing around NY that I can find.

 

I'm beginning to think that there was an extremely low number of $199 leases by a few dealers that the media jumped on. Because I can't seem to find one?

 

Edit: Not that I'm discounting anything...I'm truly interested in finding one at this price.

Edited October 18, 2012 by Intrepidatious

[akirby]

I can't find one of these $199 leases. I saw the same articles saying some people were getting it, but I don't see anything advertised except for a couple dealers out west with a limited number to sell (which have already expired or the infamous "1 available at this price!"). The lowest lease deal on the Chevy website is $299 per mo..... and nothing around NY that I can find.

 

I'm beginning to think that there was an extremely low number of $199 leases by a few dealers that the media jumped on. Because I can't seem to find one?

 

Edit: Not that I'm discounting anything...I'm truly interested in finding one at this price.

 

Some reported it was to clear out the 2012 models. Don't know if that was true or not.

[jpd80]

Some reported it was to clear out the 2012 models. Don't know if that was true or not.

Absolutely so, a quick look at Chevrolet's current incentives says they're only working financing,

0% financing over 72 months for 2012 models and 60 months for 2013 models but last month, GM had

$269/mth for 24 months on 2012 Volt.....I recon GM will be pump priming Volt sales again real soon as

the national dealer inventory seems to be increasing...

Edited October 18, 2012 by jpd80

[RichardJensen]

And in any event a $100 increase in a 24 month lease takes the subvention on a product that is almost certainly losing money at full MSRP from ~$8k to ~$6k.

 

(I'm not sure how GM accounts for the 0% money factor)

[jpd80]

And in any event a $100 increase in a 24 month lease takes the subvention on a product that is almost certainly losing money at full MSRP from ~$8k to ~$6k.

 

(I'm not sure how GM accounts for the 0% money factor)

Do they actually on sell the debt to a finance company agreeing to buy back at prescribed value at end of lease?

All the customer sees is the monthly figure and residual value at end of contract...

That way, the finance company knows how much profit they make

but more importantly, no one else knows how much GM loses....

Edited October 18, 2012 by jpd80

[RichardJensen]

The money used to buy the vehicle from the dealer has to come from somewhere, regardless of how the finance company disposes of the contract.

 

In every instance except a straight purchase from cash on hand, there will be interest costs associated with the money used to purchase the vehicle from the dealer (and in the instance of cash on hand, there is the opportunity cost involved in making a zero interest loan instead of investing the money in interest bearing assets, be they other loans or bonds or what-have-you).

 

Those interest costs may not be recovered by the lease package.

 

The finance company can use a few funding mechanisms:

 

1 - long term loans, in which they borrow a significant sum of money, use that money to make loans, and then pay the original loan with proceeds from the loans they make. This 'loan' could be in the form of bonds issued or term deposits/money market type accounts, etc. This is, AFAIK, the most expensive way of financing

 

2 - short term loans, in which they borrow a significant sum of money, short term, use that money to make loans, and then bundle and sell the loans as securities, paying back the short term loan with the proceeds from the securitization of those loans. This is considerably less expensive, but typically requires an investment grade rating, in order to be able to borrow the money short term without collateral (e.g. a big pile of treasury bonds, etc.)

 

3 - cash, in which cash on hand is used to make loans, with the loans either securitized and sold to replenish the cash available, or retained and serviced in house.

 

Loans and leases are essentially identical. A lease is a loan with a balloon payment--with an option to turn back the vehicle instead of making the final payment. Granted, leases are treated differently from a titling and property holding standpoint, but in terms of financial treatment, a lease is a loan.

Edited October 18, 2012 by RichardJensen

[Anthony]

And in any event a $100 increase in a 24 month lease takes the subvention on a product that is almost certainly losing money at full MSRP from ~$8k to ~$6k.

 

To be fair, you have to put $3k down to get that price.

[JasonM]

They do ya know, Govt tax credit of $7,500 for the Volt comes of the MSRP before cash sale or leasing.

 

Since the tax credit does not come off the MSRP, consumers in effect end up paying sales tax and registration fees on the $7500 tax credit when purchasing.

 

For states with a high sales tax and a high yearly vehicle tax this is non-trivial, especially when several years of car tax are included.