Why Is GM Buying Back Chevy Volts?

We frequently hear about "car buyback" programs that are promoted by auto dealers. For instance, General Motors and Chrysler are partnering with Ally Financial in a program that gives a new vehicle buyer the option of selling the vehicle back to Ally at a predetermined price after four years. But a new GM program announced this month is markedly different from a traditional car buyback offer. The U.S. automaker is giving new Chevy Volt owners the opportunity to sell their hybrid cars back to GM.

Why? Because of concerns about battery fires.

The National Highway Traffic Safety Administration conducts crash tests on different vehicles to gauge how well they survive impacts and protect passengers (and auto insurance companies take the information learned to heart). After carrying out side-impact crash tests on Chevy Volts, the NHTSA discovered that in three instances, the car's battery caught fire. These fires did not erupt right after the crashes; instead, it took anywhere from 7 to 21 days for the ignition of the blazes to occur. And the fires only appeared when the battery remained connected to the engines after the crashes (which is contrary to instructions found in the user's manual).

It is important to reiterate that no Volt owners have had their batteries catch fire after a crash. In fact, General Motors dispatches a team to drain the batteries of Volts whenever they are involved in collisions (which are identified through GM's OnStar system).

Nevertheless, the American carmaker initially decided to offer a vehicle loaner program to the owners of the 6,000 Volts currently on the road who were concerned about this issue; and then amended that statement to include the buyback offer.

GM officials have stated that the Chevy Volts are still safe, and explain that the buyback offer is only for the benefit of their customers' "peace of mind." In fact, GM CEO Dan Akerson has said that if the company feels it is necessary, GM will recall all of the Chevy Volts currently in use in order to fix the problem.

General Motors' proposal to buy back new Volts is certainly unusual and rare. But is it an example of exceptional customer service by an automaker who is sensitive to the public's uncertainties about new hybrid technology? Or is it the first step in attempting to avert what could be a potentially disastrous problem for a company that is trying to bounce back from bankruptcy and a government bailout? Only time will tell.

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