Chrysler Promises Cheap Gas

Jeep_card

In exchange for buying one of its vehicles, Chrysler wants to render the unfathomably complicated fluctuations in the global oil market irrelevant. Beginning tomorrow and running through June 2, anyone who buys a Chrysler vehicle will get a "Let's Refuel America" card that will fix the price of gas, diesel or E85 at $2.99 a gallon for the next three years.

As gas prices flirt with - and in some areas surpass - the $4 per gallon mark, Chrysler has certainly found a highly marketable incentive as a way of bolstering languishing sales.

Customers will pay $2.99 a gallon with their card at participating stations, and Chrysler will pay every cent of the difference. So if gas hits $5 a gallon, Chrysler's out $2.01 a gallon. With a 20-gallon tank, that's a $40 hit.

We have to wonder if Chrysler was thinking clearly. All it would take in the next three years is a rebel coup in Nigeria, or Hugo Chavez feeling ornery, to cause the price of gas to explode and turn this promotional gambit into a real boondoggle.

Also note that Chrysler is still offering a choice of incentives. According to Beverly Thacker, Chrysler's manager of sales communications, customers will have a choice between the gas deal, a special APR rate or more typical cash-back rebates. With the gas incentive it wants to give customers a sense of stability by trading those initial, traditional incentives for long-term peace of mind at the pump. Of course, figuring out if this is a good trade-off would require a solid idea of how gas prices will behave over the next three years. We wish you the best of luck.

By Stephen Markley | May 6, 2008 | Comments (12)
Tags: Chrysler

Comments 

LM

This is why US automakers deserve to go bankrupt. At least they aren't up for election what with their pandering and all.

If I were rich I'd buy the guzzliest Jeep and take it to fill it up with the most expensive gas possible under their plan just to fu&* with them.

God forbid they actually try to improve the mileage of their gas hogs.

I don't think that Chrysler produces anything that gets 30mpg or better. This gas program is a joke. You have a limit of 12,000 miles and it's based on the mpg of the car you buy. So if you buy one that gets 25 mpg - you get to save on 480 gallons a year. This would only be a benefit if gas does reach $5 gallon. Right now I can get gas at $3.40. Right now this would save me a whopping $200 a year. I'd rather take a $3000 rebate. It's not going to be long before Chrysler goes in the tank. I give them 5 years at best.

LM,
In the future, you would sound smarter if you didn't group all US automakers with Chrysler. The other two are taking great strides in fuel economy and everything else, and are challenging imports for a change, like it or not. Furthermore, the domestics are not alone in the SUV craze.

Broq

Okay folks. Let's settle down here. It's not quite the fuelish move that folks are making it out to be.

I'm going to use the Dodge Ram as an example.

By electing to opt for the 2.99 gas instead of the full cash rebate, you are going to give up $2,500 of the $5,500 rebate on the Ram. So for starters you've got to make up for the $2,500 you just lost plus the added interest that you are going to pay on that $2,500. The flip side is that Chrysler has just saved $2,500 and will collect interest on that savings.

Now let's consider that your given 12,000 mile allotment each year. Let's take a worst case and say that they estimate 12mpg for your vehicle and you've got 1,000 gallons of gasoline coming your way at $2.99.

Let's take another fairly worst case scenario and say that gas goes to an average $4.49/gallon for the full rebate period. Chrysler has to give up $1.50 per gallon. That's $1,500 per year or $4,500 total. Subtract out the $2,500 plus the interest you are paying on that (let's say the interest on the $2,500 is $300 over the life of a 5 year loan). So $4,500 - $2,800 = $1,700. Now let's subract out the interest that Chrysler made on that $2,500 it didn't give you (let's say $150 over 3 years) and Chrysler is net out $2,350 in a fairly worst case scenario of a low mpg vehicle and consistantly high gasoline prices for three years.

Your first mistake is buying a 12mpg Dodge Ram... a mistake you'd have to live with long after your gas card expires.

LM

I honestly will keep all US automakers lumped into the group. They are known collectively as the "can't do" companies because whenever someone proposes a change they respond, "we can't do that". Seatbelts, airbags, CAFE, catalytic converters.

It's not just MPG today. It's historical and it's why they suffer at the hands of their more innovative competitors. In the 90's while they got lazy and fat off of SUV sales the Japanese were off developing hybrid technologies so that now they have 10+ years of sales experience. It's always a game of catch-up with them.

Like Larry Craig they are usually caught with their pants down claiming they just have a wide stance.

kc

Geez... this is just not a good idea and it REEKS of desperate pandering. Who greenlighted this g-dforsaken program??

I thought I'd seen it all after the last few years, with gas cards, employee pricing and crazy warrantees but this TAKES IT.

::shakes head::

gk

Way to encourage more irresponsible use of our natural resources. You gotta love all the people driving full size trucks and suv's as commuter vehicles. It really makes sense to buy a vehicle that you only use to its fullest potential 1/8th of the time.

J

The marketing person will be burn in hell when the gas price keep rising and people are still driving like they can't wait to hit that red light.

Ken L.

This is actually a pretty good deal for the consumer. And right now, Chrysler needs all the positive attention it can get from potential customers. Think about the almost daily jump in the price per gallon and then having to consistently shell out more money than you’d like for your fill ups. But if a company can guarantee a lock in of $2.99 per gallon for 3 years, you’d feel a whole lot better whenever you need to fill up. Nobody said you have to buy one of their vehicles with a V8 engine; you could choose from their 4 cylinders or V6s as well. I think it’s a great idea.

Now, I noticed the card actually has the type of gas printed on it, but what happens if you want to always fill up with 93 instead of the recommended 87 octane, since 87 in some areas are already over $2.99? Will the card still work? What happens if I borrow my neighbor’s card, even with his vehicle printed on it, and use it at a participating gas station? I’m sure the gas attendant won’t give a damn since he’s still getting your business. Or better yet, what if the gas station and you colluded to overcharge for the gas? Will Chrysler still reimburse you for the difference? I truly hope Chrysler thought this one thoroughly.

LabiaMajora

Why is the mileage limited?

What if you get lower than the prescribed/suggested EPA mileage?

What if gas goes to $10 per gallon and Chrysler/Cerebrus/Cyborg goes bankrupt?

Some people at Chrysler definitely thinking in the wrong direction. But thats OK. They'll pay for it. Their products sucks anyway. This is why they discontinue half of the lineup. Tell me one person, who'll buy a Chrysler instead of Honda just bacause of this card? May be someone, who is looking for P/U truck will bite and turn from GM or Ford to Dodge. But if you looking for a nice car, small or large, Chrysler is so outdated...
Also, it is tempting now to vote for Obama. Out of 3 candidates he seem to be the only one, who realizes danger of playing "fix the gas price" game.

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