UPDATE: Dealers Pocketing $7,500 Chevy Volt Tax Credit?

June 1, 2011
2011 Chevrolet Volt

2011 Chevrolet Volt

UPDATE: Several sources have reported that the practice described below appears to be confined to a few isolated incidents, if at all, and a General Motors spokesman called the NLPC 'confused.' The NLPC meanwhile in a follow-up cried foul on GM's claim that there's "high demand" for the Volt and argued for greater transparency on the tax credit. While we couldn't reach GM for comment at the original post time, we've updated this piece to reflect later communication with the company.

Auto dealerships might not be as smoke-filled and full of tricks as they used to, but a few bad seeds continue to perpetuate the old slick stereotypes.

And they're at it again—this time with our hard-earned tax money. According to an ethics and corruption watchdog group, the National Legal and Policy Center (NLPC), GM's new-car dealers are participating in a new scheme: applying for the $7,500 federal tax credit on a new-stock Volt, then 'selling' it to another dealership to pass it off as used.

The alleged game: One dealership titles the vehicle, sells it to another dealership, and that second dealership (perhaps) splits the tax rebate with the first one.

The federal government's $7,500 tax credit on electric vehicles is a big deal. For one, it takes the sticker price of the 2011 Chevrolet Volt down to a much more accessible $33,500. And secondly, it helps kickstart a charging infrastructure and a fledgling sector of the auto industry.

And if there aren't enough actual Volt customers getting the federal rebate they're supposed to, it could be affecting the model's sales, as well as its resale value.

Sleazy Car Salesman

Sleazy Car Salesman

Mark Modica, an investigator from the NLPC, was told that in several cases he wasn't eligible for the tax credit on what was essentially a new car, because a dealership had already applied for it. One Kia dealership, possibly involved in the scam with a neighboring Chevrolet dealership, even said initially that a Volt with 30 miles had previously been a rental car.

Modica saw the same scam in Chicago, at an actual Chevy dealership, with the dealer calling a Volt with 10 miles on it used; he was told that he wouldn't be eligible for the subsidy as the dealer had already applied for it.

But according to GM, the NLPC is getting matters confused. The practice that Modica describes, the company says, is the normal practice of dealer trades or inventory swaps, which wouldn't involve the vehicle being 'sold' to a second owner (the dealership).

However, there might be a few cases in which a dealership does actually buy the vehicle, concedes GM spokesperson Michelle Bunker--such as in places outside the seven states where the Volt is currently available. In those cases they "need to be upfront with the customer if they buy it first," said Bunker. GM hasn't yet been able to verify the instances alleged by the NLPC--both of which involve dealerships to which GM doesn't directly supply Volts.

"We expect all of our dealers to be honest and very transparent," said Bunker. "But we can't keep our dealerships from buying vehicles from other dealerships."

As for whether those dealerships are legally allowed to claim the tax credit, Bunker argued that this is a federal tax issue, not a GM issue.

The scheme might not even technically be illegal, but it's definitely sleazy, and it's not what the law intended.

Taxpayers, does this infuriate you? Or is it simply part of the game? And should the tax credit be restricted to individuals, not businesses like GE?

[National Legal and Policy Center, via Edmunds, Autoblog]

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