Video: Chrysler’s gas deal

msnbc.com news services
updated 5/6/2008 2:47:56 PM ET 2008-05-06T18:47:56

Chrysler is offering to subsidize the cost of gasoline for car and truck buyers, but its biggest rivals — General Motors, Toyota and Ford — said Tuesday they have no plans to match it.

The Auburn Hills-based maker of Chrysler, Dodge and Jeep vehicles on Monday night announced an offer that caps the price of gasoline at $2.99 a gallon for three years for people who buy or lease new vehicles from Wednesday through June 2. The offer covers most of its models and is based on 12,000 miles of driving per year and the vehicle’s government fuel economy rating.

Chrysler's “Let’s Refuel America” program, which looks designed to lure new car buyers into its dealerships — it gives buyers of most of its vehicles at Chrysler, Jeep and Dodge dealerships a card that can be used for purchases of gas or diesel fuel, locking in the price at $2.99 a gallon for three years.

The automaker calls the offer “a gas price protection policy that eliminates the risk of further spikes in fuel prices” and is available at 3,511 U.S. Chrysler, Jeep and Dodge dealerships through June 2, 2008. Vehicles included in the program range from popular new compacts, crossovers and minivans to full-size diesel-powered pickup trucks, Chrysler said.

Actual savings depend on what happens to gas prices during the next three years, but based on the average price of $3.61 a gallon in Detroit as reported Monday by AAA Michigan, someone buying a 2008 Dodge Durango four-wheel-drive sport utility vehicle with a 5.7-liter V-8 engine would save about $414 per year.

The Durango is one of Chrysler’s least fuel-efficient vehicles, getting 13 miles per gallon in the city and 18 on the highway, according to the U.S. Environmental Protection Agency. The savings calculation is based on its highway mileage.

Japanese automaker Suzuki Motor Corp. has made a similar offer in the U.S., with free gas for the summer.

General Motors Corp. tried a gas payment promotion two years ago in Florida and California with little impact on sales, company spokesman John McDonald said Tuesday.

GM instead is focusing on making vehicles more fuel efficient because that’s what customers are demanding, McDonald said.

“It really didn’t do much to drive sales, and it really was for consumers more an issue of do vehicles really get good fuel economy or not?” he said.

Ford Motor Co. spokesman Jim Cain said the company has tried similar programs regionally but also has decided to focus on more efficient engines and transmissions and other measures.

“We know that fuel economy is important to consumers,” he said. “It’ll be important whether gas is $2.99 a gallon or $4.99 a gallon.”

Spokesman John McCandless said Toyota Motor Corp. is focusing its incentives on particular models, especially older ones that are near replacement or highly competitive segments such as pickup trucks.

But Chrysler is hoping its move will boost sales of its vehicles, which dropped nearly 18 percent from January through April when compared with the same time last year, according to Autodata Corp.

“It’s a way to give (customers) peace of mind,” Steven Landry, executive vice president for North American sales, said in a conference call Monday evening. “We want to get everybody through these challenging times.”

Chrysler LLC has been hit hard by the market shifting from trucks and sport utility vehicles to more fuel-efficient car-based models. Through the first four months of the year, about 70 percent of its light vehicle sales were trucks.

Chrysler said it’s in the middle of investing $3 billion in its engines and transmissions to make them more efficient for the next generation of models.

The Associated Press contributed to this report.

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