In a bid to boost sales of its fuel thirsty trucks and SUVs, Chrysler LLC rolled out a new type of incentive late Monday, May 5: Chrysler will cap the price of gasoline at $2.99 per gallon for three years on most of its models.
The program is available to buyers starting Wednesday, May 7. It is scheduled to expire June 2. Details of the program, such as which models would be eligible and how much gasoline could be purchased–were sketchy.
Customers enrolled in the program will pay the pump price the day they refuel. Chrysler and its partner on the project, Dallas-based Pricelock, will then split the invoice. Chrysler will be charged the difference above $2.99 per gallon.
“Today we are proud to introduce an unprecedented program to help put customers’ minds at ease and do something to help working people who are worried about the volatility of fuel prices and vehicle cost of ownership,” Chrysler Vice Chairman Jim Press said late Monday.
But the program has a number of limits.
Chrysler said in a statement the program covers only new vehicles, and three fuels: 87 octane gasoline, E-85 and diesel–which excludes any of the automaker’s vehicles that require premium fuel, such as its SRT models.. Buyers can choose the fuel deal or another incentive, but not both.
Consumers who opt for the gasoline deal receive a special credit card about six weeks after taking delivery of their new vehicle.
The card can only be used at certain filling stations, which Chrysler did not identify. No matter what the price is on the pump, the consumer is charged only $2.99 per gallon. There is a limit to how much fuel a consumer can buy at $2.99 per gallon, but Chrysler did not say how much.
The sales incentive will only cover the first 12,000 miles driven per year based on the estimated mileage for the Chrysler car or truck purchased, executives with the privately held automaker said.
The offer is being introduced at a time when high gasoline prices have hammered sales of the SUVs and trucks that dominate Chrysler’s lineup.
“This could be a game-changer in terms of how vehicles are sold in the marketplace,” said Steve Landry, Chrysler’s head of North American sales.
Chrysler officials said late Monday that it will begin training its dealers about the program this week.
LATE NEWS FLASH: Suzuki jumps on the program:
Suzuki follows Chrysler gas program as controversy emerges
Environmental group calls such programs a ‘cynical deal’
American Suzuki Motor Corp. has announced a nationwide sales promotion offering car buyers 0 percent financing and three months of free gasoline on retail purchases of all new 2007 and 2008 vehicles.
On Monday, May 5, Chrysler said it will cover gasoline costs above $2.99 a gallon for customers who buy or lease a new vehicle from the company. The offer is limited to the first three years customers use their cars and is calculated to cover up to 12,000 miles per year.
So far, Suzuki is the only automaker to follow suit.
An environmental group also responded today, calling the Chrysler promotion “a cynical deal.” The Union of Concerned Scientists said Chrysler is trying to fool consumers into overlooking its vehicles’ poor fuel economy and environmental performance.
“At the current price of $3.61 a gallon, the buyer of an average Chrysler vehicle would save $400 a year under Chrysler’s deal,” said David Friedman, research director for the group’s Clean Vehicles Program.
“But a mere 3-mpg boost would yield the same savings over the 15,000 miles per year typically driven in the first three years of ownership. Over the lifetime of a vehicle, such a fuel economy increase would save drivers more than $3,000. It wouldn’t stop saving drivers money after just three years.”
Suzuki’s “Free Gas for Summer” sales program kicked off May 1 and runs through June 30.
“Suzuki recognizes the economic impact resulting from soaring gas prices and thought this promotion was a great way to entice eager car buyers,” Gary Akin, vice president of sales at American Suzuki Automotive Operations, said in a news release.
Customers who qualify for the offer through American Suzuki Financial Services receive 0 percent financing for up to 60 months and a stored-value Visa debit card that can be used for fuel purchases.
Suzuki said the amount of each stored-value gas card was determined by several factors: an assumed three-month time frame for summer driving, the car or SUV’s EPA estimated highway mpg, the Federal Highway Administration’s estimated average of 1,000 miles driven per month, and the U.S. national average price of one gallon of regular gasoline as determined by the U.S. Energy Information Administration. The value of the card varies by model
