A chevrolet dealership that is part of an auto dealer

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Chapter 12 / Exercise 4
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A Chevrolet dealership that is part of an auto dealer group in Toms River, New Jersey, has sold only one Volt in the last year, said its president AdamKraushaar. The dealership sells 90 to 100 Chevrolets a month.The weak sales are forcing GM to idle the Detroit-Hamtramck assembly plant that makes the Chevrolet Volt for four weeks from September 17,according to plant suppliers and union sources. It is the second time GM has had to call a Volt production halt this year.GM acknowledges the Volt continues to lose money, and suggests it might not reach break even until the next-generation model is launched in aboutthree years."It's true, we're not making money yet" on the Volt, said Doug Parks, GM's vice president of global product programs and the former Volt developmentchief, in an interview. The car "eventually will make money. As the volume comes up and we get into the Gen 2 car, we're going to turn (the losses)around," Parks said."I don't see how General Motors will ever get its money back on that vehicle," countered Sandy Munro, president of Michigan-based Munro &Associates, which performs detailed tear-down analyses of vehicles and components for global manufacturers and the U.S. government.It currently costs GM "at least" $75,000 to build the Volt, including development costs, Munro said. That's nearly twice the base price of the Volt beforea $7,500 federal tax credit provided as part of President Barack Obama's green energy policy.Other estimates range from $76,000 to $88,000, according to four industry consultants contacted by Reuters. The consultants' companies all haveperformed work for GM and are familiar with the Volt's development and production. They requested anonymity because of the sensitive nature of theirauto industry ties.Parks declined to comment on specific costs related to the Volt.In its Monday response, GM said the Reuters estimate was "grossly wrong," but again declined to provide specific figures.GM said it allocates development costs across the lifetime volume of the program. Reuters calculated the per-vehicle development costs based on thenumber of Volts sold through the end of August.(For the full GM statement: link.reuters.com/myw52t)Business & Financial News, Breaking US & International News | Reuter...1 of 39/15/2012 10:54 PM
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Exploring Microeconomics
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Chapter 12 / Exercise 4
Exploring Microeconomics
Sexton
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