Autoblog

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]

We knew critics of Chrysler's $2.99 Gas Guarantee would crawl out of the woodwork before too long, and here they come. Automotive News reports that The Union of Concerned Scientists has called Chrysler's program a "cynical deal", noting that at today's current average price of $3.61/gallon, a customer would save about $400 a year under Chrysler's program. Being the smart folk they are, the scientists also pointed out that customers could save the same amount from a 3 mpg bump in fuel economy over 15,000 miles or a year of driving, and that better fuel economy also continues saving the customer money after three years. Damn, scientists are so smart with the math.

The criticism hasn't stopped Suzuki, however, from announcing its own free gas deal. For vehicles purchased between May 1st and June 30th, Suzuki is offering 0% financing and three months of totally free fuel in its "Free Gas for Summer" program. Buyers will basically get a stored-value credit card that's charged with a different amount of money depending on the model purchased.

These incentive programs are nothing but promotions designed to grab headlines and make buyers feel like they're getting more money back than they actually are. Playing off the media's hysteria over high gas prices, Chrysler (and Suzuki) is betting buyers will feel that paying $2.99/gallon for three years is more valuable than a $2,000 cash back rebate. Trust the math, it's really not. Nevertheless, it will likely sell more Chrysler, Dodge and Jeep vehicles than a boring $2,000 rebate would.

[Source: Automotive News – sub. req'd]