Switching to the Volt
By Noel Adams
Last week I received an interesting press release from LeaseTrader.com that said that they had been receiving a much higher than expected number of requests from Prius owners who wanted to get out of their lease to buy a Volt.
The press release said “With Verizon getting the iPhone, industry experts are wondering how many people will leave AT&T to enjoy the phone with its new carrier. And with the launch of the Chevy Volt, experts are also wondering how many people will switch from the Toyota Prius to drive the much-hyped new American car.”
It can cost thousands of dollars to break a car lease so LeaseTrader.com was set up to allow lessees to avoid the high penalties by trading their car to someone who is looking to pick up a short term lease.
One of the things that LeaseTrader.com does is to watch for trends in the auto lease market and they can provide lots of insight into trends in the automotive world. I did an email interview with John Sternal, vice president of LeaseTrader.com to get the whole story.
NA- Can you give me an idea of the volume of calls you have been getting for people wanting out of their Prius lease so they can get a Volt?
JS - “We expected to receive a handful of calls from Prius lessees throughout the country, but so far we've received excess of 250 calls from Prius drivers inquiring about the Volt and what it would take for them to escape their Prius lease.”
NA- Is this just a Prius phenomenon of have you been getting calls for other hybrid owners such as people leasing Civic Hybrids?
JS – “We've certainly been getting our fair share of calls from other hybrid lessees, including the Civic Hybrid and Ford Escape Hybrid, but the Prius still dominates the space. Focusing on the Prius exclusively was the only way to remotely compare the hybrid car scenario to the AT&T vs. Verizon scenario.”
NA- The Volt is only being sold in certain states, does the geographic dispersion of people requesting to terminate their lease correspond with this geographic area or are they spread more evenly across the various states?
JS – “It's definitely spread throughout the country. If anything, I'd say California and the Midwest have represented a larger number of calls from Prius drivers. As for the Volt availability, I think that's a good news/bad news scenario for GM. They've done a good job hyping the Volt, but I don't think they've done as good a job in setting expectations about how available the Volt will be if you wanted to go out and buy/lease one today. I see how a better communications strategy would be counter-productive to their hype objective, but the availability issue will only grow from here.”
NA- Is this only related to the Volt or are you also getting calls from people wanting to trade in their hybrid for a Nissan Leaf?
JS – “Very few calls from people inquiring about the Nissan Leaf.”
NA- I noticed that you pointed out that Prius lease rates had dropped from around $500 a month to the mid 200s, Is this related to lower interest rates, increased residual values, or a lower premium over sticker on the Prius?
JS – “Great question and one we are happy to address. Low interest rates, increased residual values and a lower premium over sticker have all contributed. But leasing as a whole has come back in a big way and that's also a reason why the lease environment today is stronger than in years past. Lenders are much more confident to use leasing as a sales tool compared with one or two years ago. With the Prius' popularity, many dealers and lenders have no problem being aggressive with lease deals to move even more Prius inventory.”
NA– Is there anything else you would like to add?
JS – “I would also add that GM versus Toyota overall has been an interesting study over the past 12 months. Toyota has stubbed its toe a bit while GM has been enjoying a big comeback from its structured reorganization. This environment has not been lost on the average driver who feeds off the momentum of the car companies. In a sense, today it's a lot cooler to shop for a GM car while Toyota has provided a few doubts in Americans' minds about the quality of its vehicles. There is something to be said for this as well as the hype surrounding the Volt.”
I think the most telling part of what John said is that hybrid drivers are looking to trade up to a plug-in hybrid, but few are looking to trade up to a full BEV.
This supports what many EV advocates have been saying for a long time, that there will be a natural progression from hybrid to plug-in hybrid to BEV. Hybrid owners appear to be showing a preference for the Plug-in Hybrid Volt rather than the Pure Electric Leaf. The expectation is when people are ready to trade in their Volt they will be more likely to go with a pure electric vehicle next time around.
Not to say that the Leaf hasn’t garnered fans, with over 20,000 orders Leaf sales will easily outstrip Volt sales in 2011. What I think is happening here is that those hybrid owners that are wanting to buy a Leaf plan to replace an ICE vehicle with it and keep their hybrid.
John also confirmed something that I have told GM on at least three occasions, they are not building enough Volts to come anywhere near satisfying demand. I see people paying way above sticker for this already pricy vehicle and I foresee shortages for a long time to come.
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