Chevy dealers are not scamming taxpayers on Volt tax credits

This weekend, a conservative group claimed taxpayers were getting scammed on Chevy Volt tax credits by dealers, proving the Volt wasn't nearly as popular as General Motors or the Obama administration says. Sorry to disappoint Rush Limbaugh, but they're wrong.

The National Legal and Policy Center's Mark Modica made some waves with this piece, contending Chevy dealers are selling the Volt to other dealers as used cars so they can take the $7,500 federal tax credit themselves. This, he said, was the fault of General Motors and President Barack Obama, who desire "to do everything in their power to support the appearance of strong Chevy Volt sales."

The story was then picked up by a number of outlets, none of whom did much in the way of vetting of the source. And in this case, it's fair to question it. The National Legal and Policy Center is one of a number of groups which criticizes the Obama administration for a living. Funded in part by right-wing activist Richard Mellon Scaife, nearly all of its stories target Democrats in some fashion, and the Volt piece was part of the site's "union corruption update" series.

OK, fine. What about the big charge that Chevy dealers are scamming a federal tax credit? Based on our research, it's highly unlikely — but if so, it's at a level that's a rounding error in the new-car business. And it would prove that the Volt is a hit.

Cars.com lists 18 used Volts for sale nationwide, compared to 603 new ones. Several of the used Volts are in far-flung states where GM has yet to officially put the Volt on sale, suggesting those dealers bought one as a demo driver or showroom showoff. Only one dealer — Glendale Hyundai in Glendale, Calif. — has more than one.

Chevy dealers are not scamming taxpayers on Volt tax credits

Glendale's stash of four used Volts is the only firm evidence Modica has of shenanigans. He says the dealership told him the cars were rentals, even though they only have 30 miles on them, and that it "raises the question of why GM or Chevy dealerships would be selling Volts to other manufacturers' dealerships when they claim that there are not enough of the cars to meet retail demand."

Yet GM doesn't control what a dealer does with a car once it leaves the factory, which is when the ownership officially transfers from the automaker. Dealers are free to mark up, discount or swap vehicles as they please; GM can browbeat or reprimand them on future orders — but it has no more control over a dealer selling Volts to another than it does to the Florida dealer asking $64,988 for a new one.

And while Modica wants to argue that swapped Volts show how GM and the Obama administration has failed, such a play by the dealers only works if there's more Volt demand than supply. Of the 13 Volts listed for sale with prices, the lowest is Glendale's four at $39,995. The average price of the 603 new Volts is about $41,000 — roughly the window sticker. Those new Volts not only qualify buyers for the $7,500 federal tax break, but also carry a raft of state and even local incentives that can save the buyer more money.

If demand for the Volt was as slack as Modica wants it to be, the used Volts should be discounted well below sticker to make up for the tax credits that are already spoken for. But with 493 Volts sold in April, and the Detroit factory closing this month while GM readies to boost production, all signs indicate a shortage of Volts. The fact is no one in America is selling a new Volt below sticker — and no dealer appears to be hawking used ones while soaking up federal tax benefits and betting against the Volt's popularity.

The NPLC's political blinders missed the Nissan Leaf, the only other mass-market vehicle that qualifies for the $7,500 tax credit. It too has been in short supply; Nissan can't say when it will fill the 20,000 U.S. orders it has for the car, and there are only 82 new Leafs for sale nationwide according to Cars.com. Yet there are three used ones available — two of which are located at Glendale Hyundai. Glendale's asking price for its Leafs: $45,000, or roughly $12,000 more than sticker.

It's also strange for the NPLC to complain that GM and the Obama administration don't have enough control over auto dealers after opposing not just the GM and Chrysler bailouts that cut hundreds of dealers, but the financial reform bill that would have put auto dealers under tougher federal regulation. (Dealers won an exemption in Congress over the administration's objections). It's just what happens when you're in the business of making noise rather than sense.