Chrysler Tries a Gas Gimmick to Spur Sales

Will the other manufacturers follow?

By Brendan Moore

05.05.2008

It’s not only politicians that roll out plans to save you money on gas costs; now the manufacturers are getting into the act.

In a plan announced to dealers earlier today, Chrysler LLC will allow U.S. consumers to lock in their personal gasoline prices at $2.99 a gallon for three consecutive years under a new incentive program. The offer is launching at a time when Ram trucks and SUVS are piling up on dealer lots due to rising oil prices and consumer sentiment that believes that gasoline will be $5 a gallon sometime in 2009.

The U.S. automaker, which has watched sales plummet by almost 18 percent so far this year, said it would offer anyone buying one of its vehicles a pre-paid card that could be used to cap fuel prices at $2.99 per gallon for three years. Details are still sketchy about how much annual mileage will be allowed under the plan, but it appears Chrysler will probably cap miles driven at 12,000 annually. It is not known how Chrysler will track mileage.

Buyers of Chrysler vehicles can opt for low finance rates, rebates, or the gas price protection plan. Customers enrolled in the gas program will pay the pump price the day they refuel, but their card will be charged only the $2.99 per gallon amount. Chrysler and its vendor partner on the project, Dallas-based Pricelock, will then electronically split the invoice at the time of sale. Chrysler will be charged back whatever the difference above $2.99 per gallon is at that particular point of sale. Which I guess also means no more searching for the lowest priced gas where you live.

“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, vice-chairman and president, Chrysler LLC said late Monday.

“This could be a game-changer in terms of how vehicles are sold in the marketplace,” Chrysler’s head of North American sales, Steve Landry, told reporters.

That might be a pretty optimistic statement on behalf of Mr. Landry, but, hey, he’s in there pitching. The marketing campaign is called “Let’s Refuel America” and it starts Wednesday (May7) and through June 2, 2008.

Chrysler’s official press release:

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Chrysler LLC Delivers Economic Stimulus; Protects Consumers from Rising Gas Prices for Three Years

– “Let’s Refuel America” available throughout the U.S. exclusively at
Chrysler, Jeep(R) and Dodge dealerships through June 2, 2008
– Three-year price protection from volatile gas prices available on
compact, mid-size and full-size models, minivans, crossovers and pickup
truck models
– Seventy-six percent of customers cite rising gas prices as “top concern”

AUBURN HILLS, Mich., May 5 /PRNewswire/ — In response to direct
customer feedback citing the prospect of rising gas prices as a top
concern, Chrysler LLC today announces its own economic stimulus package: an
exclusive gas price protection policy that eliminates the risk of further
spikes in fuel prices. With the U.S. purchase of eligible Chrysler, Jeep
and Dodge vehicles, customers can enroll in the “Let’s Refuel America”
program and receive a gas card that immediately lowers their gas price to
$2.99 a gallon, and keeps it there for three years. The offer is available
at 3,511 U.S. Chrysler, Jeep and Dodge dealerships through June 2, 2008,
and is available on vehicles ranging from popular new compacts, crossovers
and minivans to full-size diesel-powered pickup trucks.

“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,”
said Jim Press, Vice-Chairman and President, Chrysler LLC. “The Let’s
Refuel America Price Guarantee puts money in your pocket today, and allows
our customers to better manage their fuel expenses. And you can’t get it
anywhere else besides a Chrysler, Jeep or Dodge dealership.”

The Let’s Refuel America program offers consumers a combination of the
fuel price protection program and additional bonus cash up to $3,000 on
available vehicles, including Chrysler PT Cruiser, Dodge Charger, Jeep
Grand Cherokee, Dodge Dakota and Dodge Ram.

Consumer Economic Solutions

Chrysler has a number of solutions to help our customers during these
tough economic times. “Chrysler is committed to providing the best value,
and the least worries, for our customers,” said Press.

Chrysler’s lineup includes five models for under $20,000 that get 28
miles-per-gallon or better on the highway. To protect consumers from
unexpected repair costs in the future, Chrysler models come with the
industry’s best powertrain warranty, covering the original owner for the
life of the vehicle. And Chrysler has made a number of its most popular
options standard on its New Day Package vehicles.

Fuel Economy Solutions

Chrysler currently offers six models that get better than 28 miles-per-
gallon on the highway: Chrysler Sebring, Chrysler Sebring Convertible,
Dodge Avenger, Jeep Compass, Jeep Patriot and Dodge Caliber. Through April,
the six of these models combined have higher sales than in the first four
months of 2007.

The recently-launched 2009 Dodge Journey comes with an available 173-hp
four cylinder engine, helping it achieve best in class fuel economy.

The Jeep Grand Cherokee diesel 3.0-liter engine provides a
class-leading driving range of approximately 450 miles and gets an
estimated fuel economy of 18 miles/city and 23 miles/highway for 4×2 models
and 17 miles/city and 22 miles/highway for 4×4 models. Outside of North
America where fuel-saving diesel engines are in higher demand, Chrysler
offers 17 models with diesel powertrains.

This fall, Chrysler will launch in the United States, two new hybrid
SUVs, the Dodge Durango Hybrid and Chrysler Aspen Hybrid, boasting a fuel
economy improvement of more than 25 percent overall, and 40 percent in the
city. In 2010, the Dodge Ram Hybrid will reach the market.

Chrysler is currently in the midst of a $3 billion powertrain
investment offensive to develop new fuel-efficient powertrains and axles
for our next- generation models.

Chrysler supports the federal government’s new dramatically increased
CAFE fuel economy standards, which will increase fuel efficiency by an
average of 40 percent by 2020. Recently, Chrysler joined the US Climate
Action Partnership, working to find solutions to global greenhouse gas
emissions.

Customer Advisory Board

In February, Chrysler created the industry’s first Customer Advisory
Board to encourage a direct dialogue with customers and gather insight and
feedback. A recent Advisory Board survey generated the following results:

– 76 percent of the community is “very concerned” or “extremely
concerned” about fuel prices.

– 83 percent of the community responded that fuel prices will affect
their summer vacation plans.

(Note: the poll shows that 19 percent responded “extremely”, 22 percent
responded “very much”, 30 percent responded “somewhat”, and 12 percent
responded slightly, 17 percent responded that it won’t affect their
plans.)

Program Description

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. The customer is provided
with the registration process documentation and registers providing their
required personal information via the dedicated web site or toll-free 800
number. Once registered, the customer receives their gas card and
separately, their Personal Identification Number (PIN) within 4 to 6 weeks
of application. The customer then swipes their Let’s Refuel America Gas
Card at an eligible gas station, selecting up to 87 octane regular, E85
fuel or diesel fuel, and enters their PIN to begin the fueling process.
After the fuel transaction occurs, the customer’s personal credit card
(identified in the registration process) is charged $2.99 per gallon.

Let’s Refuel America Eligibility
The following vehicles are eligible for the Let’s Refuel America program:

Small/Compact Car
Dodge Caliber, Chrysler PT Cruiser, Chrysler PT Cruiser Convertible

Mid-size Car
Dodge Avenger, Chrysler Sebring, Chrysler Sebring Convertible

Large Car
Dodge Charger, Chrysler 300, Dodge Magnum

Crossover
Dodge Journey

Minivan
Dodge Grand Caravan, Chrysler Town and Country

Compact SUV
Jeep Patriot, Jeep Compass

Mid-size SUV
Dodge Nitro, Jeep Liberty

Large SUV
Jeep Grand Cherokee, Jeep Commander, Dodge Durango, Chrysler Aspen

Pickup Truck
Dodge Dakota, Dodge Ram, Dodge Ram HD

The following vehicles are not eligible for the Let’s Refuel America
program: All SRT models, Dodge Viper, Dodge Challenger, Dodge Ram Chassis
Cab, Chrysler Crossfire, Jeep Wrangler and Dodge Sprinter.

Select Program Offer
– $2.99 guaranteed fuel card for up to 3 years
– Offer valid with up to 87 octane regular unleaded fuel, E85 fuel or
diesel fuel only, depending upon purchased vehicle*
– Yearly allotment of gallons provided
– Annual gallon allotment ends each year on 7/31 (first year ends
7/31/09)

Enroll
– Easily register via a dedicated web site or by calling designated 1-800
number
– Personalized Let’s Refuel America Gas Card arrives within 4-6 weeks of
receipt of application

Use & Save
– Use the Let’s Refuel America Gas Card like any credit card – just swipe
and type in your PIN to use
– Check account transactions online
* If mid-grade or premium unleaded fuel is purchased, the customer will
be billed for the $2.99 plus $.15 per gallon for mid-grade (88-89 octane)
or plus $.30 for premium (90-94 octane). All other grades of fuel higher
than 94 octane are not covered under this program and the full pump price
will be billed through to the customer plus a $2 service fee per
transaction with no gallon usage penalty. If customer purchases unleaded
gas (including E85) on a diesel card, or diesel fuel on an unleaded gas
card, the customer will be billed the full pump price plus $2 service fee
per transaction with no gallon usage penalty.

About Chrysler LLC

Chrysler LLC, headquartered in Auburn Hills, Mich., produces Chrysler,
Jeep(R), Dodge and Mopar(R) brand vehicles and products. Total sales
worldwide in 2007 were 2.68 million vehicles. Sales outside of North
America were the highest in a decade with an increase of 15 percent from
2006. The Company’s product lineup features some of the world’s most
recognizable vehicles, including the Chrysler 300, Jeep Wrangler and Dodge
Charger.

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COPYRIGHT Autosavant.net – All Rights Reserved

Author: Brendan Moore

Brendan Moore is a Principal Consultant with Cedar Point Consulting , a management consulting practice based in the Washington, DC area. He also manages Autosavant Consulting, a separate practice within Cedar Point Consulting. where he advises businesses connected to the auto industry. Cedar Point Consulting can be found at http://www.cedarpointconsulting.com.

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4 Comments

  1. It’s all in how you package the deal. To truly assess the deal you need to look at the bottom line, how much do you put in and what you will get in return. Marketing is all about packaging. In my geographic area I have seen advertisements from the local truck dealers that offered free gas for a year. The deal had discolsure that limited the number of miles driven in the first year to a quite reasonable number. So you take the maximum number of miles as disclosed in the program, multiply the the projected value of gas over the next year and here comes the value of the proposed deal. Instead of offering a huge break in dollars, you present the same break packaged as free gas. This can work with a lot of people out there you cannot fully translate a pure dollar amount into an actual value they can actually materialize on their own. When presented with the same economic benefit verbalized as somthing easy to visualize (the amount of money I would not have to pay for a year), that may be attractive to some. Call it a gimmick if you want, marketing is about grabbing attention and speaking to perception. Marketing is also about talking in terms potential clients understand and can relate to. Put this together with the current price of gas and you have a nice package that will work for many. Is this a right thing to do? It depends how you decide to look at it. You may conclude that the concept of packaging is dishonest and therefore conclude that the deal is objectionable. But we all package almost everything we offer in our daily lives, whether it is convincing our children or coworkers to go our way. Personally I do not see anything wrong with the Chrysler’s idea. In my opinion you cannot just look at the surface, instead you should see the entire picture – what is the overall cost of purchase plus the cost of maintenence. BMW, for example, offers free maintenance. Is this program really free when you take into account the purchase price? Is the cost of the Lexus vehicle really a bargain (relatively when compared to the German luxury vehicles) when you add the cost of maintenance conducted at the dealer’s shop? The overall picture may be more complex what the initial impression might be. What would make me happy is the reversal of the detrioration that American car manufactures have been facing for decades now. Regardless whether deserved or not, the whole industry is slowly dissapearing and this is very disturbing. So as long as they’re honest, let them come up with programs that will help them reverse those negative trends and hopefully regain at least some what has been lost over the years.

  2. I guess this works for a buyer that believes that the rise in the price of gasoline is temporary. Using that logic, this makes sense, because you get some help on the price of gas while you’re waiting for it to return to a lower level.

    But if gas keeps going up in price and you own the truck or SUV for five or six years, that’s a different piece of math. Those last few years of ownership could be tough in terms of fuel costs, especially if gasoline is $5, $6, $7 a gallon. It’s like an adjustable-rate mortgage, except with a vehicle.

  3. I think most people will be able to do that math and many of them will take a pass on either the deal or a gas hog, and instead buy one of the smaller Chrysler cars.

  4. Interesting idea…..not new…..but interesting all the same.

    The airlines buy fuel like this….they buy in bulk and bank against hedge funds….bit like buying international currency.

    The fuel card concept is fairly straightforward. Australia has Fleetcard for instance. You front up to the fuel station, fill your tank, swipe your card, type in your odometer figure (which is how they track mileage) and drive away.

    The thing is……use this as a sales thing that lasts for only three years AND buy a sub 30mpg car and your re-sale in three years is toast…and very charcoal laden toast at that.

    Sounds a little like a sub-prime mortgage to me…

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