Chrysler: Let’s Ruin America!

Looks like Chrysler has figured out a novel way to move their 2008 model gas guzzlers off the lot. Sign up for their new "Let’s Refuel America!" credit card and they’ll lock in the price of gas at $2.99/gallon for three years.

That’s right, it’s a 36-month guarantee that you don’t have to think about moving over to a more fuel efficient car, commuting by bus, lobbying your elected officials for a national passenger rail system or the fact that Chrysler is essentially writing checks to Saudi Arabia, Venezuela, Nigeria and Vladimir Putin on your behalf.

Before you rush out to purchase yourself a new, 13 mpg Dodge Durango and set up shop at the nearest pump as a gasoline reseller, you’d better read the fine print. The program caps the number of annual "price-protected gallons" that Chrysler will actually pay for. If I understand their "gallon allotment calculation" correctly (Charlie Komanoff, feel free to step in here and do some math), Durango owners get a maximum of 2,400 discounted gallons over three years. As for global warming, oil war, suburban sprawl and American economic disintegration, Chrysler is offering a lifetime guarantee.

  • lee

    suzuki is offering free gas for the summer if you buy a new car.

    http://www.suzukiauto.com/specials/

  • Chris H

    So essentially, Chrysler is banking on increasing their market share to offset their fuel subsidy. I suspect that they are betting that fuel prices do not reach the point in which their subsidy is greater than their profit margins…

    BTW, does anyone know what Chrysler’s profit margin is on a Durango?

  • Larry Littlefield

    http://online.wsj.com/article/SB121123740260305225.html?mod=todays_us_nonsub_pj

    “Earlier this month, employees at Miller Grossbard & Associates in Houston found an extra $50 in their paychecks. The small accounting firm added the money — and plans to continue doing so on an interim basis — to help its 28 workers cope with rising gasoline prices.”

    “Miller Grossbard is among a growing number of employers that are going out of their way to help workers grapple with the increasing cost of getting to and from the office. Companies are launching a variety of relief initiatives such as providing alternate ways to get to work — including purchasing buses and vans to give employees free rides — and changing corporate policies to accommodate workers who travel for their jobs.”

    What this means is that the labor market is clearing, so employers cannot pay workers less in inflation-adjusted dollars without losing them. So, in those cases, the employer rather than employee has to swallow the gas cost increase. That means labor costs are rising in auto-dependent places relative to transit dependent places.

    And that matters, because we don’t have baby boomers and former housewifes flooding into the labor market anymore, and labor availability is becoming a factor in business decisions for the first time in 40 years. A recession could change that temporarily (want a job? Move or drive to where we are) but the structural trend will remain.

  • By my calculations, three years is roughly 1096 days. That’s an average of 2.19 gallons per day. At thirteen miles per gallon, you get the discount for about 28.5 miles per day. All those people who live more than fifteen miles from work (or have to drive for groceries, soccer practice, etc.) will have to pay for the extra at the market rate.

  • It’s revolting.

    That said, I give Chrysler some credit for innovative, out-of-the-box marketing strategies. What I’m trying to point out is, why can’t the MTA and other mass transit agencies come up with some out-of-the-box strategies of their own to improve service and increase ridership?

  • Spud Spudly

    What’s the math on this guy, who I saw in a Gannett newspaper? Quote:

    One SUV owner, chiropractor Jeff Kieffer, 43, of Boise, is trying to head off the problem by selling his 2007 Hemi-powered Jeep Grand Cherokee Limited on online classified ad service Craigslist.org before he buys a new vehicle. There are “a lot of people who want to drive a car like this,” said Kieffer about the Grand Cherokee, listed for $31,000. And he’s one of them. He wants a new version of the same model to take advantage of a just-announced Chrysler promotion that guarantees three years of gas at $2.99 a gallon — a hefty 65.5 cents a gallon less than the record $3.645 U.S. average reported Thursday by travel organization AAA.

    Selling a 2007 version of a gas-guzzling POS SUV in order to buy the 2008 version so he can get the $2.99 gas deal??? If that makes sense then why would anyone buy his car instead of just buying a new one themselves?

    Regardless, we’re going to see a lot of thrashing as companies shed excess SUV production capacity, dealers try to move bloated SUV inventories and consumers try to ditch their SUVs on saturated used car markets. I read somewhere that membership in the Geo Metro fan club is increasing rapidly and that book value on a used 3-cylinder Metro is up by 20 percent in the last six months.

  • Chris H

    Actually, thinking about it, Chrysler will probably invest their profits in oil companies as it would make a good hedge and offset their subsidies should the price of oil increase dramatically. Pretty ingenious I have to admit.

  • Transit Guy

    Actually, this may be a smart move for Chrysler, or Dodge, or any of the American carmakers that have a clue about what’s coming.

    For a moment, pretend that automakers who have a clue exist in the US, and that you are one of them. For years, you’ve been selling people vehicles that increasingly make less and less sense in light of world resource constraints. You know that to remain relevant long-term, you will need to build significantly more fuel efficient vehicles. A re-tooling of your factory lines will be needed.

    The public, which is collectively ignorant of the issue, just wants prices to go down and doesn’t want to hear weird urban hippies telling them to change their behavior and bike or hop on the bus.

    So you want to liquidate your gas guzzling fleet, and the public is not ready to act responsibly on their own behalf, not just yet. You do the $2.99 price guarantee to appeal to the “I don’t wanna change” crowd, and liquidate your soon-to-be-obsolete inventory.

    You build up goodwill with customers who see you taking a hit for them and helping them fight economic uncertainty.

    Then, as soon as the $2.99 period is over, and the price of gas is somewhere around $5-$7, you have them back on your doorstep looking for that new model you spent the last few years reproducing in your factory.

  • Spud Spudly
  • Car and Care Free

    Thank you for bringing attention to such irresponsible behavior! I’ve been seeing these commercials for a few weeks now and I’m still disgusted every time I see them.

    At some point, I can imagine these companies practically giving away such vehicles….errr monstrosities.

    Absolutely the wrong way to go.

    Oh BTW, if we all lived like “weird urban hippies” …. do you know how many environmental problems would simply not exist?

  • Betting against the oil price going up much further is an excellent way for them to go extinct, the optimal outcome.

    Why stand in their way if they want to self-destruct?

  • James

    Reading this just made me throw up in my mouth a little. I hate for people to lose their jobs, but this dinosaur of a car company is scarcely different than a crack peddler – they could at least follow Toyota’s example and start making vehicles to suit the times we’re living in.

  • dc sisler

    I cant believe the stupidity of these bloggers. Buying more Toyotas certainly isnt going to save any jobs. Incentives have always been a part of marketing domestic vehicles. I still believe most Americans prefer to purchase domestic cars. BTW my brother sequia gets 11 mile per gallon

  • Josh

    The only time I bought a car was about seven years ago, while I was living upstate. I would’ve been happy to buy a domestic car except that they just weren’t as good. I bought a Mitsubishi.

  • Sheila

    Actually, one of my main criteria when I was buying a car was that it not be domestic. the big three automakers disgust me, their vehicles are mostly not fuel efficient and, fair or not, my impression is that they make shoddy products.

  • Niccolo Machiavelli

    Hard to believe that Urbanis managed to work a sneer at the MTA into this thread. MTA diesel prices are going up just like everyone else’s. But, MTA can’t raise fares. Yet they can take a hit for not being as “creative” as the auto companies.

  • vnm

    This makes great sense from Chrysler’s point of view because people pay much more attention to gas prices (posted 10 feet high, as they are, at every big suburban street corner) than they are to the fixed costs of owning a car. So if Chrysler estimates that it will cost them X to offer this $2.99 gas deal, they can raise the cost of the car by X and their customers will think they’re getting ahead because the don’t have to worry about gas prices anymore.

  • gecko

    Margins are probably still relatively high in big heavy wasteful vehicles so it’s easy hide additional costs and promote this type of ridiculous technology.

    Look at IBM which got out of low-margin personal computer and laptop manufacturering while staying with high-margin mainframes, consulting etc.; though, Lenovo seems to be doing quite well.

  • Spud Spudly

    Margins on those huge SUVs ain’t what they used to be and they’re getting smaller all the time. The really huge ones like Tahoes and Suburbans are selling for much less than they did last year, with tremendous “incentives” being offered. People aren’t buying not just because of gas prices, but also because the trade-in values are cratering at the same time while everyone rushes to bail out of their own gas-guzzlers. On top of that, a lot of people in the market for new SUVs are opting for good deals on slightly used ones instead. GM just ordered massive cutbacks in SUV production for next year, and Chrysler I would guess — with its new private equity management team focused intensely on the bottom line — would do the same and is probably just desperately trying to unload whatever inventory that have on hand. They also have to be nervous because they have a newly designed pickup truck coming out soon while that market is also tanking (so to speak).

    To all of which I say, thank goodness for the end of the SUV. Never mind the gas issue, just thank goodness for safer streets and safer traffic.

  • Bike Tourist

    This is expected behavior from a large corporation. For a long time, corporations have been treated like individuals by our government — that is, they have been accorded all the privileges of an individual without some of the responsibilities.

    But the corporation is not a live human being, only a concept. It has no concience or moral sense. It knows only the bottom line. It makes perfect corporate sense to do anything to further profits.

  • John

    Any and every passenger vehicle that fails to be fuel efficient and fail to get 25 mpg should be taxed much more at the pump and yearly. These heavier and more street destructive vehicles don’t deserve a free ride.
    Desperate companies do desperate things.

    WSJ: This decade has already seen burst bubbles in tech stocks, homes and credit. Now, it seems, another segment has fallen victim to irrational exuberance: the U.S. auto market.

  • J. Mork

    John — just tax all fuel heavily and the low mpg vehicles get taxed more automatically. Much simpler to administer as well.

  • John

    Taxing at the pump only will tax fuel efficient vehicles too, the opposite of intentions. Only through personal property tax hikes can less fuel efficient vehicles be fully and properly taxed. Both sources are necessary and property taxes are already administered, it’s that simple.

  • huh

    John, no – taxing at the fuel pump will impact inefficient vehicles more than efficient vehicles, so people still have an incentive to get more efficient vehicles. It’s basic math.

  • Jim

    Why can’t people see that this is simply a sales gimmick.
    No different than a rebate.
    Leave them alone.
    They are not the only ones doing it.
    I’d like to see my company go to four-tens so we could cut out an additional day of driving each week.

  • Spud Spudly

    Yeah, where I work there are quite a few people who have “flex time” as they call it and work 9 hours a day and get to take every other Friday off. Good deal.

  • antonio311

    Chrysler is working on new fuel efficient vehicles! The new Dodge Journey crossover has best in class fuel mileage! Also they are developing a new compact car right new! Give them a break already, Daimler is the main reason Chrysler hasn’t developed more fuel efficient vehicles! Now without Daimler Chrysler is making all of their vehicles more fuel efficient, and they are also substantially improving Chryslers Quality! Give em a break already!

  • BrianGuy

    Yeah, Chrysler should just go bankrupt instead, resulting in 2.5 million job losses, rather than buy some time with this strategy as they shrink the size and displacement of the larger cars.

    By the way, this promotion is also good on Chrysler’s small, fuel-efficient cars like the Dodge Caliber (31 MPG), Chrysler Sebring 4 (30 MPG) and Dodge Avengder 4 (30 MPG).

    As usual, you’re making the popular conceit that Chrysler only makes big gas guzzlers, when in reality Toyota offers more gas-guzzling large SUV models (and sells more of them annually) than Chrysler.

    Oh but I forgot, Toyota is the “green” company and sells 100,000 Priuses a year, so those 750,000 large-displacement V8 powered SUVs, and 250,000 luxury gas-guzzling Lexuses don’t matter anymore. 😉

  • Davis

    Nah, Brian, I don’t like Toyota either but, you’ve got to admit, they were way out in front of the Big Three on the hybrid thing.

    BTW, most of us live in cities and the Caliber gets 24 mpg in the city, the Sebring gets 21 mpg in the city and the Avenger (a name that I’m almost embarrassed to write) gets a pathetic 19 mpg in the city. Your highway numbers are wrong for two of the models you cited as well.

    If Chrysler went bankrupt and blew away like a dustball maybe we’d have the impetus for some real innovation in automaking again. You know… car companies that focus on something more than the shape, styling and number of cup holders in their vehicles.

  • Outspokin

    Fuel efficient vehicles also pollute, destroy streets, use scarce resources and thus don’t deserve a free ride… easy for even grade schoolers to understand-it’s basic math.

  • mb1234

    Chrysler has probably hedged an estimated volume of gasoline @ 2.99/gallon. Those betting against the hedge (probably financial firms) think that gasoline will drop below 2.99/gallon and Chrysler will have to pay the difference. If prices moderate around $80-90/barrel, Chrysler will be on the losing end of their hedge.

    From a business standpoint, it buys them some time to try to sell more existing models while they scramble to develop more fuel efficient models that comply with the CAFE standard increase in 2017.

  • Jim

    My 2005 Chrysler 300 (V-6) has achieved as high as 31 MPG on the highwy. I get 25 MPG driving it 50 miles per day to and from work.
    My 2007 Hemi Ram gets a respectable 21 MPG highway and 17.5 to and from work while my co-worker’s 4.7 Tundra is getting 14.5 to and from work.
    I’m just so tired of people trashing our North American products.
    If Toyota or Honda had come up with the $2.99 per gallon gimmick, it would have been billed as “Brilliant.”
    I’ve never owned a “foreign” car, a Ford or a Chevy, but I would like to have a 1963 split window Corvette……

  • Spud Spudly

    If Toyota or Honda had come up with the $2.99 per gallon gimmick, it would have been billed as “Brilliant.”

    You’re obviously not familiar with Streetsblog, Jim.

    Chrysler today makes some awful vehicles. The Avenger, Nitro, Caliber, Sebring, Compass, Patriot and Commander are all market bottom feeders. I owned one Dodge and it stalled whenever it rained more than a few drops. None of the over one dozen Toyotas myself, my wife and our parents and siblings have owned (many of them made in the USA, not just “North America”) have ever had a serious problem.

  • Jim

    Well, Spud. I have to apologize. I didn’t know STREETSBLOG was the authority on vehicle ownership. What was I thinking…..??
    I was taught to never use the word “obviously” when referring to someone else opinion, but it is “apparent” that I hit a nerve. I didn’t mean to… I’m stating facts from MY experiences. I’m not trying to trash anyone’s vehicle. I applaud Toyota for being able to pull the wool over so many people’s eyes better than For, GM or Chrysler.
    I had one Chrysler product that I had SERIOUS problems with (back in 1984-85). I worked out the problem, and kept the car for over ten years. The dealer treated me fairly, and I respect that.
    Looks like Toyota had the most recalls for 2006, 2007, and so far is the industry leader for 2008. They will probably recall more cars than Chrysler will build, but that doesn’t make them better.
    How many of the Avengers, Nitros, Calibers, Sebrings, Compass’s, Patriots or Commander’s have you ever owned?
    If I believed everything I ever read about cars versus my ownership experience, I probably wouldn’t buy another car.
    Oh, and did you ever see the commercial where the Ford and Toyota truck run out of gas, and the ex-football player picks the drivers up in his Chevy? Did you ever notice the pickup with the best fuel (gasoline) mileage was not in that commercial. You know, the Dodge….

  • antonio311

    Spud Spudly i’m sure has never owned any Chrysler vehicle. I’ve owned many over the years and have never NEVER had any major problems. Also Toyotas quality has dropped rappidly in the past few years, while Chryslers quality has been improving! I’m on the customer advisory board, and have spoken to Doug Bett’s personally. Within 9 months Chrysler quality will be substantially better and i’ll say as good or better than Toyotas quality! Chrysler is making strides at lightning speed to set the benchmark in quality! Meanwhile Toyota and Honda’s quality has continued to decline! Also Chrysler makes the worlds best minivan, and the new Dodge Journey is the class leader in its crossover segment! Also the new Ram will again set a new benchmark for pickups!

  • Mark Walker

    Antonio, the car is obsolete! And so is the minivan! And so is the landscape built around them! You need a good pair of walking shoes, dude! And maybe a bike! And a map of the transit systems around your home! And if there aren’t any, a new home! Otherwise you’ll ended up stranded in suburbia! Get hip! Exclamation point! Exclamation point! Exclamation point!

  • Anonymous

    This promotion IS brilliant, it is no different than the usual rebates offered by car makers, the only difference is that they can pay it over a 3 year period (and they are not guaranteed to pay all of it, only if you use it all) and it allows them to unload their back stock of gas guzzling vehicles that would not otherwise sell even if you offered them a $2400 instant rebate because people will not read/understand the fine print.

    From a marketing standpoint this is brilliant on two fronts, they have a delayed discount payment and they can unload all the vehicles that were in production while the economy was still booming allowing them income from those vehicles while they re-tool for production of their more fuel efficient models (which are crappy too)

  • Greg

    In response to the comments of Toyota’s declining quality and the ascension of chrysler’s quality, I would like to ask where you are getting that from?

    I have a 99′ corolla that gets 35 mpg highway and it has 215,000 miles on it and never had a major problem at all, or minor (I take unreal care of my cars).

    On the other hand, my 97 Chrysler minivan is immobile due to a busted transmission (my experience with most Chryslers) and the need for all of the engine seals/head gaskets to be replaced (which the dealership told me would be about $2500). It was serviced just as meticulously as the Toyota, is only 2 years older, and had only 116,000 miles on it. Not to mention the rear windshield wiper stopped working, the chrysler emblem on the back of the van fell off, and many other cosmetic things that just made me think one thing: CHEAP.

    I realize the two automobiles cant be directly compared in a lot of aspects, but as far as quality goes, you can see who wins.

    Needless to say I just bought a 2008 corolla as my replacement for the van. The kids are now grown.

  • antonio311

    Chrysler makes cars that last longer than the other cars. Chryslers engines and transmissions are by far more reliable than the imports. So big deal, a piece of molding on a Chrysler may not fit perfectly, or small quality problems here and there, But everyone knows Chryslers powertrains last longer than the other brands! Also Chryslers quality is getting better faster than the other brands. Remember in the lat 90’s Chrysler was the most profitable car company on the planet, more than Toyota is now! Chrysler just needs a moment to get their groove back, after Daimler looted them!

  • Change NOW

    Here in Central NY, there are SUVS sitting in people’s yards with huge FOR SALE signs….I pass them every day on my scooter….

    I hope they rust out!!!!!

    What a waste!!!!! but we live in a disposable culture…disposable ethics, disposable workers, disposable cars, disposable morals, disposable laws…..

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