2012 Chevy Volt, picture copyright GM

Did the NHTSA investigation into Chevy Volt fires "lower demand"?

A market research company with a questionable history concerning the facts claims demand for the Volt has lowered, when sales figures show the opposite.

According to several news reports currently circulating CNW Research claims the "federal investigation of three fires that occurred after Volt crash tests lowered demand for the car," which flies in the face of the fact that Chevy Volt sales increased ever since the Chevy Volt crash test fire news broke on November 11, 2011.

It would be expected that Chevy Volt demand would have decreased once we learned of the fire risk, because conventional wisdom is that the buying public is easily spooked and will run away from risky products. We see this behavior routinely with various product scares leading to consumer panic.

If it were true that the prospective Chevy Volt owners were spooked and panicking over the fire risk then why would Chevy Volt sales have increased in the Fall of 2011? Sales were 723 in September, 1,108 in October, 1,139 in November and 1,529 in December. News of the fire risk was released on November 11, 2011, meaning the buying public has had two months to digest this information. The Volt sales in December was to people who presumably had learned of the fire risk at least a month earlier. Is this pattern of sales growth compatible with a panicked public and lowered demand?

The statement attributed to CNW Research seems to originate in a Bloomberg News report from Jan 4 where Bloomberg talks of Volt sales having fallen short of GM's sales projections for the year. CNW's reasoning is not explained, and the claim of "lowered demand" fits into the narrative in the Bloomberg article of weak sales and general dismal prospects.

It may be that one persons "weak sales / dismal prospects" is another persons "bright promise" depending on how you look at the situation surrounding both the Chevy Volt and Nissan Leaf. (see Strong sales for 2011 Leaf and Volt shows bright promise rather than dismal flop) However the fact of Chevy Volt sales growth is so counter to what one could call "lowered demand," that it's worth trying to find out what CNW Research's reasoning is, so that we can adequately evaluate their claim.

Unfortunately the dozen or so news articles currently circulating which repeat the "lowered demand" claim above indicate many journalists are not evaluating the claims they're republishing in their news articles. Just as unfortunately we're unable to find a document from CNW Research explaining the reasoning they followed to conclude that demand for the Chevy Volt is lowered.

UPDATE: For an update to this story, see: Lowered demand in Chevy Volt due to price, not fires, interest in Nissan Leaf stable

It turns out that CNW Research is a "reclusive" market analysis company with a questionable history of having played fast and loose with the facts. The CNW Research website publishes very little information itself, leaving us with the information on a Wikipedia page. There the company is described as "reclusive" and is "known primarily as an automotive marketing research company". The customers for their research include government agencies, several news organizations, Wall Street brokerage houses, financial institutions, so despite their poor quality website their customer base indicates a company whose opinion has clout.

Their Wikipedia page goes on to describe CNW's role in a controversy concocted a few years ago about the relative fuel efficiency of the Toyota Prius and the Hummer. The H2 (a.k.a. Hummer) was still in production by GM at that time, and anybody looking at the fuel economy stickers of the Prius and the H2 could quickly see that the H2 had much lower fuel economy than the Prius. However, CNW's publication "Dust to Dust" made the bold claim that a Hummer gets between four and six times better fuel economy than a Toyota Prius. That conclusion seemingly flies in the face of facts, and was reached through a highly questionable line of reasoning about total lifetime of the Prius (109,000 miles) and Hummer (over 300,000 miles) and various other factors.

What we can conclude is that CNW has a history of concocting research to fit a desired narrative, and has a well-connected base of subscribers. Just as the "Hummers are more efficient than Prius's" claim appears contradictory to the facts, so too does the claim that "Chevy Volt demand is lowered following disclosure of the fire risk". Yet this claim is being repeated in many news reports.

About the reporter: After 22 years in Silicon Valley's software industry David Herron is now writing about green transportation (electric vehicles) from Silicon Valley. He also runs the popular electric vehicle discussion forum, visforvoltage.org, and is the author of the book "Node Web Development".

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

CNW Research (wikipedia)

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Let me elaborate a bit on the studies we've conducted on the Volt. First, lower demand does not necessarily determine sales volume. It is only a measure of the universe that would consider the product. In some cases, as with the Volt, the pool begins extremely large and diminishes over time. This is a common in automotive. Second, with so many Volts currently going to corporate fleets and government agencies, there is little doubt that Volt sales will increase. The true measure, however, is if the ratio is in the 1 to 4 range with one fleet/business sale to four consumer sales. We won't know that for at least another six months once pre-orders are fulfilled. Third, I am personally a huge supporter of the Volt and hope they not only meet GM's sales goal, but far exceed it. My own electric car experience dates back to 1976 as not only the owner of a converted EV but the publisher of an electric vehicle publication and a current member of the Electric Auto Association. That, however, doesn't mean the Volt gets a pass in our company's research. Finally, if anyone would like a copy of the reports we've recently done on Volt, they can contact me at [email protected] and I will make sure the survey summaries are emailed.
Nice try Art. The term "lowered demand" has now been re-defined for the common person from something intuitive to something that requires a secret decoder ring to understand. Your credibility and that of the organization you represent is even lower now that you have tried to explain your twisted logic.
One final comment: Since David was able to find our website, it would have been helpful if he had called the phone number listed or emailed me. I would have gladly taken the call and answered any questions as well as sending a copy of the original and subsequent studies.
Ford did market studies, focus groups, and got the estimates of "demand" before producing the Ford Edsel. Because of that I'd have to agree with the part of the authors story about net sales being the only true metric. When GM couldn't produce enough Volts to their own goal and had to tell the dealers to sell their only allotted showroom bait and switch Volt then we have a recent history (and you don't have to have a long memory) to see some coat and tie types trying to blow smoke up our....tailpipes again. GM had a plan to sell the Volt platform with more batteries and no gen set. What happened to that? The newest Mitsubishi entry with it's price point has got to be keeping them up late at night with worry.