Volt Dealers Accused of Tricking Consumers, Gaming Federal EV Program

By · May 31, 2011

Mark Modica

A former Saturn dealer turned auto pundit is accusing some Chevy dealers of gaming the federal plug-in vehicle incentive program and passing on the hidden costs and legal liability to consumers. In a post on the website of the National Legal and Policy Center (which is a right-leaning watchdog group,) Mark Modica charged Saturday that dealers across the country have been purchasing their allotment of Chevy Volts and then re-selling them on the used car market at full price. The alleged practice makes purchasers ineligible for the $7,500 federal electric vehicle tax credits—and allows dealers to pocket the difference.

Explained Modica in an interview with Fox News this weekend:

“They are titling the vehicles, one dealership buying them from another, taking that $7,500 tax credit that they are allowed, and then reselling them at MSRP. They are not reducing the price. They are looking to game the system.”

In the listings Modica points to there is indeed no clear effort on the part of the accused dealers (which surprisingly enough include a string of Kia dealerships,) to communicate to consumers that buying a Volt used makes them ineligible for the $7,500 credit. The practice has the potential to confuse some buyers into filing false tax returns, only to learn later that they've actually paid $7,500 more than they thought for a Chevy Volt .

While several of his charges are plainly supported by public listings on used car websites, it should be noted that Modica has written and spoken out extensively in opposition to the Obama administration's policies with regard to the auto industry. And as former Saturn dealer and disgruntled GM bondholder, Modica has also chosen to draw certain conclusions that may not be fully supported by the anecdotal evidence he collected online and over the phone.

But regardless of his slant, the apparent practice Modica points to is a mockery of what the federal electric vehicle incentives were intended to do—which was create a groundwork for mainstream EV and PHEV adoption by putting plug-ins within the reach of more people—and it needs to be stopped.

Carmakers and dealers have claimed in the past that whatever plug-in price gouging exists is inevitable, but is that really true? Could some legislative remedy possibly be found to prevent dealer abuse of federal tax law? Given the attempts that are already in place to reform the credits in other ways, it's something that should at least be looked at.

In the meantime, if you're looking to pay $52,884 for a used Chevy Volt, Raymond Chevrolet of Antioch, Illinois, may have just the deal for you.

Comments

· · 3 years ago

The federal tax credit is usually taken against personal income tax, I wonder how a car dealer claims that? This sounds fishy.

· Soapy Johnson (not verified) · 3 years ago

NASCAR pulls the plug on inaugural Chevrolet Volt 400. The story can finally be told ... http://placeitonluckydan.com/2011/05/nascar-pulls-plug-on-chevrolet-volt...

· · 3 years ago

It is illegal for anyone buying the car with the intent of reselling it claiming the federal tax credit. So, those dealers will be in trouble if they do try to claim the credit - now that it is all over the blogosphere.

· apeweek (not verified) · 3 years ago

False alarm.

GM has responded to this story, explains that dealerships are unable to take this tax credit and resell Volts, and explains how the NLPC (the anti-environment group who is the source for this story) got "confused:"

http://wot.motortrend.com/dealers-stealing-7500-ev-tax-credit-gm-nissan-...

· JJJJJJ (not verified) · 3 years ago

There shouldnt be any tax credit at all, it's burning taxpayer money. As long as demand outstrips supply, it's being wasted.

· jim1961 (not verified) · 3 years ago

How unsurprising that right-wingers are twisting the truth to suit their agenda. I wonder how all the GM executives, who are mostly conservative, feel about being constantly attacked by Republicans.

· · 3 years ago

@EVNow
Is it really true that dealerships can't legally claim a credit on these transactions if they've purchased the car from another dealer rather than the OEM? I haven't been able to find any info to confirm that.

---

While no Volt dealers appear to be doing back and forth swaps to take advantage of the subsidies, the fact remains that the government is effectively paying for dealers to price gouge. (As they are whenever a dealership increases the price of a federally subsidized car above MSRP.)

And GM seems to have no problem with this:

Peterson said there’s no real issue with the practice so long as dealerships are honest with customers — and based on the NLPC report, both dealers willingly inform customers that the cars are technically used, and are therefore ineligible for the tax credit.

...Law requires that only the first title owner is eligible for the $7500 incentive, meaning that the purchasing dealership gets the money instead of the end consumer.

In other words, due to short supply and apparently high demand, a subsidy that was created to make the first plug-in vehicles more affordable for everyone is being taken advantage of to pad the de facto price of the car.

Furthermore, while these dealers may not be withholding the fact that their Volts are technically "used," the listings for the cars don't say anything about eligibility for the credits. I would hope (and assume) that at some point during the purchase process the dealership would be upfront about that information instead of simply assuming that the purchaser knows that used cars with 10 miles on them aren't eligible.

Obviously this report is coming from very questionable sources, but I don't see how the underlying allegations about dealer-to-dealer transactions and who's actually getting the government's money when they take place, are really being disputed by GM.

I just wish we could have written the law to prohibit credits from going to anyone who paid more than MSRP for their car, or possibly in some other way that would have prevented any gouging from taking place.

· · 3 years ago

@Zach - the credits are only for the first buyer - and not for resellers.

This applies to both dealers & individuals. We have had some threads in MNL as to whether an individual who buys Leaf, registers it and sells it in a short amount of time (say a couple of days of driving) can actually claim the credit. He would have difficulty proving that he didn't buy for resale. Dealers would have that problem too - to a much greater degree.

The only exception is for leasing companies. They get the tax credit even though they aren't using the car. There has also been some talk about whether the leasing company would get the credit if the leasee buys the car before end of lease (say after a month).

· Anonymous (not verified) · 3 years ago

This story needs to be taken down or edited if it contains false info.

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