A dramatic report from a Virginia-based non-profit claims that Chevrolet dealerships are stealing a federal tax credit from customers, but General Motors says that’s not the case, and that the accusations are “confused.”
To help offset the high cost of new green cars, the federal government offers buyers of electric cars like the Chevrolet Volt and Nissan Leaf a $7500 tax credit. However, the National Legal and Policy Center says it has identified two dealerships that titled a new Volt and claimed the $7500 tax incentive for their own coffers, then resold the vehicle as used. Buyers of a used Volt are ineligible for the tax break, leading the NLPC to accuse Chevrolet dealerships of “gaming” the tax credit.
In response to the report, Volt spokesman Rob Peterson says there is little cause for concern. The two dealerships contacted by the NLPC are legally unable to sell a new Chevrolet Volt. One is a Kia dealership in California, which can’t sell the Chevy for obvious reasons; the other is a Chevrolet dealer in Chicago, which can’t sell a Volt as a new vehicle as Illinois is outside of the car’s launch markets.
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.
In order to sell a Volt, the aforementioned dealerships must buy one from a Chevrolet showroom in one of the Volt’s launch markets. When that happens, the purchasing dealership (whether Kia or Chicago-area Chevy) has to title the vehicle, meaning it henceforth must be sold as “used.” The law clearly states only the first title holder is eligible for the $7500 incentive, meaning that the purchasing dealership gets the money instead of the end consumer.
Despite what the NLPC claims, this situation does not occur when dealerships perform “dealer-to-dealer” trades to swap Chevrolet Volts between showroom lots, Peterson said. The car’s title is simply transferred from one dealer to the next.
“There’s no question that the NLPC is confused,” Peterson said.
So why would a customer buy a Chevrolet Volt for which they can’t claim the tax credit? One reason may be early-adopter status and the car’s general scarcity. Only about 200 Volts are available at dealerships nationwide, and the car is selling so quickly that Peterson jokes, “We don’t sell Volts at the moment -- it’s almost like we deliver them.”
A customer in a non-launch market might be willing to forego the tax bonus if they can be the first in their town to drive a Volt. Peterson also cites the case of Jim-Ellis Chevrolet in Atlanta, Georgia: The dealership can’t yet sell new Volts, but bought from a showroom in New York so that it would attract customer attention. Peterson claims the “halo car” draws about 25 people per week to the Atlanta dealership.
The Nissan Leaf electric car also is eligible for the government’s $7500 tax credit, but Nissan spokeswoman Katherine Zachary told us there won’t be any issues of dealers selling the Leaf used. For now, the Leaf is only available to customers who have reserved and negotiated their new car purchase online. Nissan only delivers vehicles to customers residing in the car’s launch markets, and since supplies are directly tied to orders, it’s unlikely a similar situation would play out with the Leaf. Nobody residing outside the Leaf’s launch regions can buy the car, nor can another dealer poach one from a Nissan showroom.
Source: NLPC, Chevrolet, Nissan