For Chevy Bolt, discounts here, markups there

Just seven states into Chevrolet's gradual rollout of the Bolt EV, some dealerships already are discounting the car by several thousand dollars, even as others demand a markup above sticker price to take advantage of early demand.

The pricing disparity -- one dealer in Southern California was advertising a Bolt last week for $4,439 less than an identically equipped car at a store 5 miles away -- shows what happens when a new kind of vehicle meets a sprawling, old-line retail network that's only beginning to feel out the market for it.

The Bolt, with a 238-mile battery range, has no direct competition in its price range at the moment, but its novelty has a flip side for Chevy dealers who have to battle one another for a pool of customers that's still relatively small. The dealerships also have more than a dozen other nameplates to sell, many of them more lucrative than the Bolt, which needs no oil changes and little other routine maintenance.

"We've been really aggressive in getting it out there and getting people's attention," said Marty Greenwood, managing partner of Greenwood Chevrolet in Hollister, Calif. The dealership, about 100 miles south of San Francisco, is advertising discounts of $2,000 to $3,000 on its Bolt inventory this month.

"We're here to sell cars, and we're in a smaller town, so we need to be a little bit more aggressive," Greenwood said. "We just watch the market and what's going on out there. What is the magic number to move the vehicle?"

California dealerships, which got the Bolt first, have been the quickest to mark it down. Fremont Chevrolet, which delivered the first three Bolts to retail customers in mid-December, raised the discounts advertised on its website from $2,000 in February to $3,000 in March. Another Bay Area dealership, Dublin Chevrolet, listed $3,000 discounts. Both were promoting three-year leases starting at about $260 a month, with $3,995 due at the time of sale.

Combined with the $7,500 federal tax incentive and $2,500 California rebate that the Bolt qualifies for, buyers there can effectively pay less than $25,000 for the base model, well below the $30,000 threshold that General Motors sought to meet with the car.

Nationally, the average amount consumers paid below sticker price grew from $1,400 in January, a 3.4 percent discount, to $2,200 in February, a 5.3 percent discount, according to TrueCar.

Chevy has no cash-back incentives on the Bolt, though it's offering 3.9 percent financing. So all of the discounts reduce the dealerships' profit on each sale and have no impact on GM's revenue from the car.

"If somebody's marking them down, it's coming out of their margin," GM spokesman Jim Cain said. "Dealers are independent businesses, and capitalism at work tends to drive local market pricing."

The Bolts being marked up are generally in more rural areas where there are fewer dealerships and less inventory. Several dealers listing Bolts for as much as $5,000 above sticker price didn't return messages from Automotive News seeking comment.

Cain said GM discourages dealers from adding a markup, but can't stop them.

At Harbor Chevrolet in Long Beach, Calif., all 21 Bolts shown on its website are discounted by at least $1,285. One Bolt Premier is $4,160 off, a nearly 10 percent markdown. Another nearby dealership listed 32 Bolts in its inventory, with two priced at discounts of more than $5,200.

"We price every single vehicle in inventory to move," said Sergio Navarrete, a Harbor Chevrolet sales manager. "Our business model is more geared toward volume vs. any one sale. Per unit we make less, but long term it works out better."

The Bolt will eventually face competition from Tesla Inc., which plans to start building its $35,000 electric car, the Model 3, this year at a plant 2 miles from Fremont Chevrolet.

Tesla CEO Elon Musk, in explaining why the company sells directly to consumers, has argued that franchised dealerships are less eager to sell electric cars, in part because they don't produce as much future service business.

"Existing franchise dealers have a fundamental conflict of interest between selling gasoline cars, which constitute the vast majority of their business, and selling the new technology of electric cars," Musk wrote in a 2012 blog post explaining his company's retail model. "It is impossible for them to explain the advantages of going electric without simultaneously undermining their traditional business."

Many Chevy dealers are eager to use the Bolt's head start over the Model 3 to draw people away from Tesla's lengthy reservation list. Greenwood, whose store is in a burgeoning Silicon Valley bedroom community, said one customer recently canceled a Model 3 reservation after test driving a Bolt.

Chevy sold 2,693 Bolts from December through February. Sales began initially in California and Oregon before expanding to New York and several other East Coast states. Nationwide availability is expected by September.