The GM Volt and Price Gouging

Word has come from GM that the new Volt will cost $41k before your check from Uncle Sam for being a good citizen drops that price by several thousand. Some people are quite excited about the car. They are welcome to that excitement. Since this is the first year of production, and there are a number of excited people, it is entirely possible that there may be more people who want to own a Volt than there are Volts available for purchase.

In the following article in Wired, we see how GM plans to handle such a problem:

Volt electric carMany will no doubt howl at the price, but GM expects demand to exceed supply in the first year. That raises the specter of price gouging. Although GM cannot require dealers to sell the Volt at the suggested retail price, Ewanick said it will “strongly suggest” they do so. Gouging is something the company is very much determined to prevent.

Ewanick also said there are so many dealerships lining up to sell the car in each market that “we feel they will maintain integrity.”

So, GM will nudge the dealers into not gouging their customers. According to the article, gouging is defined as selling the car for more than suggested retail price. What? I thought that price gouging was charging crazy amounts for plywood after the hurricane (and people needed the plywood). That is, taking advantage of a crisis to bleed people when they must purchase necessary things. Pardon me if I don’t see a Volt as a necessary thing. If a dealer wishes to charge $50k for it, and someone wants to spend that on it, let it happen. If the person can find a dealer to sell it for less, then let that happen, too.

It rubs me wrong that GM believes many dealerships in a given market will “maintain integrity,” that is, keep everyone at the suggested retail price. No, many dealers in one market means competition. That’s what keeps the prices down–until, of course, every dealer but one in a given market is out of Volts. Then, the equation changes.

“But, but, but,” you say “if the price goes too high, then poor people can’t buy it and they’ll be prevented from driving an environmentally friendly vehicle.”

Oh well, I can’t even afford to fly the family somewhere on an eco-friendly jet, but I think we’ll get over it.