Filed under: Car Buying, Marketing/Advertising, Chrysler, LLC.
Chrysler extends $2.99/gallon gas offer another month
Much hubub has been made over the current Let's Refuel America program in which buyers can choose to lock in the price of gasoline at $2.99/gallon for three years courtesy of Chrysler LLC, but the incentive has apparently been successful. Chrysler announced this morning that the program, launched on May 7th and scheduled to end May 31st, will continue for more than an extra month to July 7th.
The deal is that purchasers who choose the Let's Refuel America program will get a gas card that's linked to their credit card. They can use the gas card at 97% of the nation's gas stations, and while the price on the receipt will reflect the actual price/gallon of gasoline, only $2.99/gallon will show up on the purchaser's actual credit card. The deal doesn't apply to every Chrysler vehicle (the Viper, Challenger, Crossfire, all SRT models, Sprinter, Ram Chassis Cab and Jeep Wrangler are excluded), and there are limitations like a yearly allotment for gallons and a cut-off after 36,000 miles. Of course, customers can also choose plain old cash back or 0% financing, too.
According to Chrysler, however, many are choosing the Let's Refuel American program (we'd love to know a raw number, but none were given in the press release after the jump), and the vehicles with the highest take rate are the most fuel efficient ones in the company's lineup like the Dodge Caliber, Journey, Avenger and Chrysler Sebring. The states that in which the program is most popular are California, Connecticut, Indiana, Ohio and Washington.
So clearly the program is working for Chrysler, enough at least to extend it another month. This means that it's helping dealers sell cars, though we wonder what happens if the cost of gas goes up as much in the next three years as it has in the last three years. Could this program end up hurting Chrysler's bottom line in exchange for the short term gain of selling more cars, or has the automaker somehow hedged its bet against that scenario?
[Source: Chrysler]
PRESS RELEASE
CHRYSLER LLC RESPONDS TO CUSTOMER AND DEALER FEEDBACK, EXTENDS $2.99 GAS GUARANTEE FOR 2ND MONTH
- Chrysler, Jeep® and Dodge dealers' feedback drives mid-month extension of new incentive program
- Consumer interest high for the Let's Refuel America program as average gas price in U.S. rises to $3.80
- Alaska, California, Connecticut and Hawaii now average over $4 a gallon
Chrysler LLC today extended to July 7 the Let's Refuel America $2.99 gas guarantee program, which offers customers the opportunity to lock in their gasoline purchases at $2.99 a gallon for three years, up to 36,000 miles. The program was launched on May 7 for the month of May only, but extended for a second month in response to dealer and customer demand for additional time.
Even before the full impact of the national and local advertising has been realized, the Let's Refuel America program already has created a high level of word-of-mouth consumer awareness, with increased traffic coming into Chrysler's 3,511 dealerships and onto its Web sites. After one week, Chrysler's Web site activity is up 25 percent versus the previous week, with internet leads increasing by 34 percent.
"Customers and dealers across America have told us they like the gas guarantee incentive option, so we are providing a second month for shoppers to take advantage of it," said Jim Press, Chrysler LLC Vice-Chairman and President. "Let's Refuel America, the Lifetime Powertrain Warranty and the New Day Packages are all examples of our commitment to deliver more value and peace-of-mind to our customers."
Let's Refuel America Program Details
Through July 7, Let's Refuel America is available on virtually all Chrysler, Jeep and Dodge compact vehicles, SUVs, sedans, minivans, and pickup trucks, including its five vehicles that get 28 mpg on the highway for an MSRP under $20,000. Not included in the program are the company's high- performance vehicles such as the Dodge Viper, Dodge Challenger, Chrysler Crossfire, and the entire SRT® lineup as well as the Dodge Sprinter, Dodge Ram Chassis Cab and Jeep Wrangler.
Customers who purchase or lease an eligible Chrysler, Jeep or Dodge vehicle have a choice of one of three incentive packages of similar value: Cash back; 0 percent financing (for eligible customers); or the gas guarantee program, which on some vehicles also includes up to $3,000 additional cash back. Only the Let's Refuel America incentive grows in value if gas prices rise. Upon purchase, customers can evaluate the three options with their dealer representative to determine which incentive best meets their personal financial preference and tolerance for risk related to rising gas prices.
"What our customers and dealers like best about this program is the flexibility of three incentive options, each with a unique benefit," Press said. "Some customers need cash back immediately for a down payment; others don't like paying high interest rates; and many are tired of worrying about rising gas prices and want to be protected. We are pleased to offer every customer a choice of what's best for their individual situation."
Customers who select the Let's Refuel America $2.99 gas guarantee program will receive a gas card (linked back to their own Visa or MasterCard) that is valid at 97 percent of gas stations in the United States. Purchases at the gas stations will be for the full price being charged that day, but only $2.99 per gallon will be billed back to the customers' credit card. Chrysler picks up the rest, regardless of how high gas prices rise.
Initial Results
After the May 7 launch of Let's Refuel America and before the full impact of the advertising has been realized, the highest take rates have been on the new Dodge Journey crossover, Dodge Caliber, Dodge Avenger and Chrysler Sebring sedan.
"The most incremental incentives in this gas program are on the company's most fuel-efficient vehicles, which typically do not have this level of incentive available," Press said. "Our customers who buy smaller vehicles put great value on being protected against rising gas prices."
From a geographical perspective, the highest take rates have been in the states of California, Connecticut, Indiana, Ohio, and Washington. These five states are among the 12 highest fuel price states in the country.
"We are pleased that Let's Refuel America seems to resonate with many Americans during this time of gas price volatility," Press said.
From a marketing perspective, Let's Refuel America is supported by national television spots, Dodge Journey ads tagged with the program information and national print, radio and Internet presence.
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Reader Comments (Page 1 of 2)
icu812ru469 3:37PM (5/19/2008)
once again, the dumbos with no math skills rule the world... it's been estimated that average savings over three years will be about $2000, which is only equal to any factory incentives that would have been offered otherwise. So, in reality, not really saving anything unless gas goes to like $6/gal, which will never happen in the next three years. So, for those that bought, have fun paying for it AFTER the three years...
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h8rain 4:08PM (5/19/2008)
"So, in reality, not really saving anything unless gas goes to like $6/gal, which will never happen in the next three years."
While I doubt it would hit $6/gal, but if it continues to raise at the rate from the past year (about $1), $6 is not out of the realm of plausibility.
>.< I can't barely imagine that is even possible.
Naveed 4:50PM (5/19/2008)
you sure about that? Or is it the people without math skills that are being taken advantage of.
The difference in $3 vs $4 would be less than a thousand dollars if the vehicle is using less than 15 gallons a week.
Naveed 4:52PM (5/19/2008)
less than $1000 per year that is...
PJ 3:55PM (5/19/2008)
"The deal doesn't apply to every Chrysler vehicle (the Viper, Challenger, Crossfire, all SRT models, Sprinter, Ram Chassis Cab and Jeep Wrangler are excluded)..."
So, in other words, any of their products that are actually worth buying.
The gas deal is attractive marketing spin, but smart buyers will see right through it. Spend a little extra up front for an Accord 4-cyl, and its vastly superior resale value and higher MPG will, in the long run, outweigh any initial gimmick savings you'd have gotten on an Avenger. And you won't have to spend five years in a penalty box.
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rwcmick 4:18PM (5/19/2008)
John,
Chrysler has hedged the price of gasoline so that they won't get burned on this promotion.
http://www.autonews.com/apps/pbcs.dll/article?AID=/20080519/ANA06/805190398 (sub required)
Cheers,
rwcmick
All Cars, All the Time
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Dave T. 4:45PM (5/19/2008)
it didn't hedge the price it hedged the amount of fillups you could have which is in the small print and declared up front. So now that gas is $4.40 in chicago you'd save $2340 on a new Dodge Journey. Vs the previous $1000 incentive. So on that car this is a very good deal..if you live in Chicago.
rwcmick 4:49PM (5/19/2008)
When Chrysler LLC decided to offer customers a guarantee of $2.99 a gallon for gasoline over three years, the company had to make sure it wasn't going to lose a bundle of money if gasoline prices soared.
So Chrysler's treasury and purchasing departments got involved.
"We've hedged ourselves to protect against fuel price increases," says Michael Keegan, Chrysler vice president of sales operations and volume planning and one of the chief architects of the gasoline guarantee. "It's similar to the way we hedge other commodities.
rwcmick 4:53PM (5/19/2008)
Dave,
I quoted the link to the Auto News story discussing Chrysler's hedge on gas prices.
Always questioning me, aren't you bud?
Now I'm taking that beer back from the Dodge Journey review comment.
Dave T. 4:58PM (5/19/2008)
I gotcha. It sounded like you were saying they capped the promotion to consumers. I now owe you beer.
Torrent 4:29PM (5/19/2008)
2.99 Gas won't distract consumers from Chrysler's Tata-like build quality.
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jj 4:47PM (5/19/2008)
I'm sure it's been done, but I was curious so I did some really simplified calculations to check this. If gasoline somehow stayed a constant $3.99 for your next 36,000 miles and you get 20 mpg, you save $1800. If you get 25 mpg, it's $1440 in savings. If gas were $4.99 average for those same 36k miles, you'd save $3600 or $2880 for 20 and 25 mpg cars, respectively. I didn't see Chrysler's fine print, but I guess you could hope for $5.99 gas for 36k, in which case you'd be saving $5400 or $4321. The 4.99 average scenario could be closer, if a bit high. However, the less efficient the vehicle, the better the savings, so if you drive a bigass diesel truck (which is more expensive at the moment) and get lousy mpg, you could save bundles. Those big trucks already have huge cash rebates though, so that could be moot.
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Toy Yoda 5:35PM (5/19/2008)
How would Chrysler know that you are filling up a Chyrsler car? Maybe I'll just buy a cheapo Chrysler for a daily driver, and keep filling up my gas guzzling, soon to stroke-and-bored by www.racing-dynamics.net M6?
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DKB_SATX 6:26PM (5/19/2008)
They probably use the fleet-management technique of having you enter your odometer reading on the pump at each fillup. If the numbers stray out of an acceptable range (a huge jump between fillups, not enough delta between fillups, later value lower than previous, etc.) it flags for audit. Lots of people with a company car and gas card do that.
montoym 6:37PM (5/19/2008)
As was mentioned below and also in the previous posts regarding this offer, Chrysler doesn't care what you put the fuel into.
Either way, you'll be limited in how much you can get. They take the EPA figures on the car you bought, figure how much fuel it will use over 36K miles and then give you an allotment of fuel for each year which will cover 12K miles of driving. So, you get 3yrs(36K miles) of $2.99/gal. fuel.
You are limited to only buying the octane grade that the vehicle is designed for however.
Problem I see in your situation is that the M6 likely uses 93 octane(or higher), while the "cheapo Chrysler" likely uses only 87 octane and you'll only pay the $2.99/gal. price on 87 octane fuel. Any other grade will be the normal price.
I still think this would be an OK deal only if you bought a diesel or if you live in CA. It's also assuming that gas stays above $2.99/gal. which I don't expect. Surely not for 3yrs anyhow.
mroverlord 6:09PM (5/19/2008)
I believe the original press release stated that it didn't matter WHAT you filled up (as far as vehicles) but it had to be the grade of fuel that your Mopar product uses.
As for the TATA product quality remark:
A) Have you ever drvien a TATA?
B) have you driven a Dodge lately?
Truth is that the Mopar makes quality products, just lackluster design and interior materials. I get sick of people saying they suck, when most people are just repeating what they read. I love my Dakota..no rattles, great handling, good fuel economy, comfortable on long drives.
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whofan 6:33PM (5/19/2008)
My Chrysler products have been on par with the other makes I drive. I think Chrysler has more of a style issue than a quality issue. They deperately need a true Neon replacement and Plymouth back!
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k.w.a 6:51PM (5/19/2008)
$2.99 is now considered good.. remember two years ago when we all thought the world was coming to an end because gas hit $2.99? remember when $1.99 was bad? $4.99, here we come
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dave0mary 7:20PM (5/19/2008)
Hmmm ... I'm starting to think that Chrysler thinks the American consumer is dumb and won't do the math ... because if you make your best deal, get 0% or whatever, the gas deal is "no deal".
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Duh4 8:51PM (5/19/2008)
What is the most interesting about this offer is the fact chrysler believes gas will not go below $2.99. Thats amazing, so who called the CEO? Bush, Cheney?
"Hey this is W. We gonna keep that gas high for awhile, go ahead and keep that deal goin'. Yep. Talked to exxon today. What? No not nu-clear power, I'm talkin' bout oil."
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