Chrysler Hopes Gas Subsidy Will Spur Sales
It was only a matter of time before automakers started using subsidized gas prices as a sales tool – in fact, Jesse Toprak, Edmunds.com's senior industry analyst, suggested last week that the time is now.
Keeping Jesse honest, Chrysler today announced a plan that will let new car and truck buyers freeze the cost of regular gas, E85 and diesel at $2.99 a gallon for up to three years.
The company is calling the plan "Let's Refuel America," and says the offer kicks in Wednesday and expires June 2 (although, as we've all seen, incentive plans have a way of outliving their original expiration date if they're driving a lot of new traffic).
For a vehicle averaging 25 miles per gallon and traveling 12,000 miles a year, the guaranteed price freeze is worth $144 for every dime above $2.99 per gallon that the price of regular gas rises.
There's a lot of small print and red tape involved, and the gas price incentive has to be taken in lieu of most other incentives that Chrysler is offering at the time.
The subsidy is limited to 12,000 miles per year at the individual model's listed EPA combined city-highway fuel economy and is based on the price of regular grade, 87-octane fuel.
Thus, if regular gas is selling for $3.79 a gallon, Chrysler would pay the 80-cents per gallon difference. But if a customer chose to fill with premium at $4.09 a gallon, Chrysler still would cover only 80 -cents per gallon of the cost.
On a few vehicles, including the Dodge Ram 1500 pickup and the Dodge Charger sports sedan, Chrysler will continue to offer cash rebates along with the gas cards -- $3,000 for the Ram, which now has a $5,5000 cash incentive, and $500 for the Charger, which presently carries a $2,000 rebate.
Some of Chrysler's least efficient and better-selling vehicles aren't covered, including the entire SRT performance vehicle lineup, the Dodge Viper, Jeep Wrangler and Dodge Challenger and the Dodge Sprinter and Ram "chassis cab" commercial vehicles.
Chrysler said qualified buyers will receive an electronic card linked to their existing Visa or MasterCard credit cards. The customers will be billed $2.99 per gallon on that credit card and Chrysler will pick up the difference – subject to the caveats mentioned above. (Once issued, the card can be used for any vehicle, but it will always be tied to the EPA mileage of the Chrysler car or truck for which it waas issued.)
The plan won't hurt Chrysler sales, although how much it will help the slumping company – if at all -- remains to be seen.
It's a good idea though – prepaid gas cards were used as incentives by several automakers back in 2006 – and automakers love to copy. So expect competitors to launch gas (price) cap programs of their own in coming weeks.
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