Chrysler's Cheap Gas Offer Comes Under Fire

Posted: May 7, 2008

Yesterday, Chrysler announced its "Let's Refuel America" initiative -- a program to (sort of) guarantee that buyers of most new Chrysler, Dodge and Jeep vehicles can buy gas for $2.99 a gallon for three years.  Today, the offer has already come under fire from environmentalists.

Autoblog, "The Union of Concerned Scientists [UCS] has called Chrysler's program a "cynical deal", noting that at today's current average price of $3.61/gallon, a customer would save about $400 a year under Chrysler's program."

In a press release, David Friedman of the UCS' Clean Vehicles Program notes that "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."  He comments, "Instead of gambling with Chrysler on the price of gas over the next three years, car buyers should go with the certainty of a fuel-efficient vehicle."

Chrysler badly needs the sales boost the gamble could bring.  The San Jose Mercury News notes, "As gasoline tops $4 per gallon in some areas and crude oil spikes to new records, no major automaker has been hit harder than Chrysler.  The No. 4 U.S. auto seller still relies on trucks and sport-utility vehicles for 70 percent of its sales, and buyers are shunning the more fuel-efficient models it has introduced in the past few years."  Chrysler has suffered the largest sales drop of any U.S. automaker this year, and the gas offer is seen by some as a desperate move to end the slide.  "Chrysler's major competitors, Ford Motor, Toyota Motor, General Motors, and Honda Motor all said they would not follow with their own subsidies."

Nevermind Chrysler's motives, we question whether the program makes any sense for buyers.  754 words into the press release announcing the initiative, we find the catch:

"The Let’s Refuel America gas card program works when a customer purchases a new and unused Chrysler, Jeep or Dodge vehicle and selects the program in lieu of other available incentives." [emphasis ours]

Let's see -- $400 worth of free gas in exchange for giving up rebates of anywhere from $2,000 (on most Chrysler passenger cars right now) to $8,000 (on the Dodge Ram)?  No thanks.

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