Tuesday, May 6, 2008

Incentive to get a Chrysler: $2.99 gas

Deal locks in the price per gallon for 3 years


Chrysler LLC announced a new incentive program Monday that will allow customers to lock in the price of gasoline at $2.99 a gallon for 3 years when purchasing most of the automaker's new vehicles.The Auburn Hills automaker and its truck-heavy lineup have been hit hard as the price of gasoline has skyrocketed and buyers have shifted away from trucks to more fuel-efficient cars.

Chrysler executives say the new program is aimed at giving customers greater peace of mind regarding the volatility of gas prices -- a major issue customers are bringing up to dealers across the country.

The so-called Let's Refuel America campaign will be available at Chrysler, Dodge and Jeep dealers beginning Wednesday through June 2.

It includes most of the automaker's vehicles, including its minivans, Dodge Ram pickup and Jeep Grand Cherokee SUV.

"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," Jim Press, Chrysler president and vice chairman, said in a statement. The program "puts money in your pocket today, and allows our customers to better manage their fuel expenses."

The average price of self-serve regular unleaded gasoline in Detroit as of Monday was $3.61, according to AAA Michigan.

Under Chrysler's plan, the guaranteed price covers an annual allotment of gallons based on 12,000 miles divided by the average mileage per gallon of the purchased vehicle.

At $2.99 a gallon, drivers of the two-wheel-drive Dodge Ram 1500 pickup, which gets a combined 16 miles per gallon, according to U.S. Environmental Protection Agency estimates, could see a savings of $465 over 12,000 miles, based on today's average cost of gasoline in Detroit.

As the price of gasoline increases, so do the savings.

"Anything that has gas in it gets attention nowadays from consumers, so it's a smart strategy," said Jesse Toprak, executive director of industry analysis at Edmunds.com. "The expense from Chrysler's perspective may not be as sizeable as compared to, say, an actual cash rebate," he added.

Last month, Chrysler spent, on average, $3,795 in sales incentives of its vehicles, according to Edmunds.com.

Just last week, Chrysler executives told the Free Press that the nation needs high gas prices to encourage consumers to buy more fuel-efficient vehicles, and Press seemed to chide proposals by presidential hopefuls Sens. John McCain, R-Ariz., and Hillary Clinton, D-N.Y., to suspend the 18.4-cents-a-gallon federal excise tax on gasoline in a so-called gas-tax holiday.

"How can you be encouraging automakers to produce more fuel-efficient vehicles and then do something like that? There's an inconsistency," Press told the Free Press on Thursday.

Monday, he said the new program was consistent with giving customers what they want. "The customer is either choosing a regular incentive, an APR" -- annual percentage rate -- "or this," Press said. "All we're doing is taking the volatility out and giving them peace of mind on what they're going to be paying."

He noted that the automaker's vehicles that require a lot of gasoline, such as the Dodge Viper, are not part of the program. "It's not about how to make us not see our responsibility, but it's really about being responsible to our customers' wants," Press said.

Stuart Schorr, a Chrysler spokesman, said the incentive program also applies to lease customers.

So far this year, Chrysler's U.S. sales are down 18% from last year. Chrysler trucks are down 23%. The Dodge Grand Caravan minivan, which was redesigned and launched late last summer, is down 37% so far this year.

The customers of eligible new vehicles will be provided with registration documentation and be able to register at a Web site or over the telephone. They then will receive in the mail within four to six weeks a gas card to be used at eligible gas stations. The special price is for 87 octane regular, E85 fuel or diesel, the company said.

The gas purchase is charged to the customer's personal credit card at the $2.99 per gallon rate.

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