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The Chevrolet Bolt has become the Bad News Bears of 2021. Nearly a month ago General Motors announced it’s recalling every single Chevy Bolt ever made due to a potential fire risk. A defect within the battery system has so far caused 12 fires out of 147,000 Bolts produced and 3 injuries.
For many brands and models, this would be a death blow. Audi almost pulled out of North America due to a series of unintended acceleration recalls in the 1980s. In the 1990s, Ford installed over 13 million defective Firestone tires on its then-best-selling Ford Explorer. When the recall was made on those tires in August of 2000, Ford’s best-selling SUV never again reached its pre-recall sales numbers.
So why are some dealers buying up 2021 model year Bolts for more than $28,000, which is more than they retailed for just a few months ago? One dealer who wished to remain anonymous told us, “They [GM] are already going to pay half the value of the car with the new battery. Buybacks will be way cheaper for them.”
The Cost For A Voluntary Buyback Is Relatively Not That Much
The last buyback program performed on over 100,000 vehicles was Volkswagen’s Ddieselgate scandal, which featured federally mandated buyback offers that were highly generous to owners and dealers.
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Although the Volkswagen case involved everything from outright fraud to alleged fatalities (none of which exists here), General Motors has a rare opportunity to eliminate a potentially fatal issue at a very small fraction of what Volkswagen had to pay. Unlike Dieselgate, GM hasn’t been a part of a federal probe and is providing early disclosure to all Bolt owners. It has also just announced a plan to update the Bolt’s software and to fix the specific modules within every battery pack.
The Financial Risks Are Minimal With A Voluntary Buyback On All Chevy Bolts
Car dealers live or die by understanding the free market. With prices for Chevy Bolts heading up in the wholesale markets instead of down, and with the six-million-vehicle-strong Manheim Auctions forecasting that a 2021 Chevy Bolt will lose no more than $100 in value over the next 12 months, the opportunity for a buyback program on all Chevy Bolts seems to be a surprisingly strong possibility, so dealers are responding by scooping them up.
Supply Is Way Down For New Cars
Thanks to the chip shortage, which is likely to last until at least 2023, new and used car prices have gone through the roof. This has helped keep the Chevy Bolts prices strong and steady.
(Manheim Used Vehicle Value Index here)
The average used car is now worth nearly 25% more than it was worth a month ago according to Manheim Auctions. New car production has been slashed, in some cases by 40 percent, which has led to racetracks and stadiums filled to the brim with unsellable cars that are waiting for parts.
GM may not have much of a downside with a voluntary buyback offer if they decide to go in that direction because the shortage in inventory is allowing even unpopular models to sell for close to their MSRP. This is in very stark contrast to prior years where GM had to offer substantial rebates and incentives to sell the Chevy Bolt.
Bad Publicity Would Doom GM’s Electric Vehicle Program
The future of General Motors is pretty much riding on the success of its electric vehicles over the next five years with 30 models scheduled to be released between now and the year 2025.
Every report of a fire or, even worse, a fatality, brings the automaker that much closer to offering an optional buyback on the Chevy Bolt.
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