Interesting idea from Chrysler

[trifectarich]

If you get 25 mpg, you'll need 480 gallons to drive 12,000 miles. But if the price of gas goes up by another dollar or so, this becomes more and more attractive.


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Chrysler LLC, looking to spur sales, will offer new car buyers a $2.99 gas guarantee starting Wednesday.

The auto maker will give new customers a Chrysler, Dodge or Jeep branded fuel card that will lock their gas price at $2.99 a gallon for three years, Chrysler co-Chairman Jim Press said.

In addition, the auto maker will give up to $3,000 back on the Chrysler PT Cruiser, Dodge Charger, Jeep Grand Cherokee, Dodge Dakota and Dodge Ram.

The gas money allocated to each customer will be based on 12,000 miles a year divided by a vehicle's estimated miles per gallon.

 

[Chef]

Great idea.

 

[93Devil]

If you get 25 mpg, you'll need 480 gallons to drive 12,000 miles. But if the price of gas goes up by another dollar or so, this becomes more and more attractive.


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Chrysler LLC, looking to spur sales, will offer new car buyers a $2.99 gas guarantee starting Wednesday.

The auto maker will give new customers a Chrysler, Dodge or Jeep branded fuel card that will lock their gas price at $2.99 a gallon for three years, Chrysler co-Chairman Jim Press said.

In addition, the auto maker will give up to $3,000 back on the Chrysler PT Cruiser, Dodge Charger, Jeep Grand Cherokee, Dodge Dakota and Dodge Ram.

The gas money allocated to each customer will be based on 12,000 miles a year divided by a vehicle's estimated miles per gallon.

Good.

Gas prices are going to go down soon.

No company would do this unless they were going to make money down the road. Once Bush is out and the environmental restrictions on gas has gotten a little more in line, the prices will fall. I'm guessing in two years, $2.75 a gallon will be about right.

Chrysler needs to focus on building a car that does not rattle like a child's toy after 2,000 miles or runs after 75,000 miles.

 

[Sam Mills 51]

The Big Three as a whole need to work on making cars that don't rattle like children's toys. Though it must be said that while those domestic cars, across the board, don't sound as dependable, even the bad ones will run 75,000 miles given no wrecks or catastrophic circumstances.

We can only hope that when W leaves office that someone will do something about the price of gasoline. He won't because that's how he made his fortune ... small wonder it doesn't get addressed.

Good idea by Chrysler. But here's to betting that gasoline prices won't stay this high. To boot, the domestics need to sink their money into engineering and not cutting corners rather than schmaltzy ads and gimmicks. Those don't make vehicles better.

 

[PCLoadLetter]

Perhaps Chrysler could try a novel approach: build a car people want to buy instead of paying people to buy their cars.

 

[Stoney]

Perhaps Chrysler could try a novel approach: build a car people want to buy instead of paying people to buy their cars.

Toyota's already taken that gimmick.

 

[playthrough]

12,000 miles a year...what a novel concept.

 

[Pete Incaviglia]

If you get 25 mpg, you'll need 480 gallons to drive 12,000 miles. But if the price of gas goes up by another dollar or so, this becomes more and more attractive.


---------------

Chrysler LLC, looking to spur sales, will offer new car buyers a $2.99 gas guarantee starting Wednesday.

The auto maker will give new customers a Chrysler, Dodge or Jeep branded fuel card that will lock their gas price at $2.99 a gallon for three years, Chrysler co-Chairman Jim Press said.

In addition, the auto maker will give up to $3,000 back on the Chrysler PT Cruiser, Dodge Charger, Jeep Grand Cherokee, Dodge Dakota and Dodge Ram.

The gas money allocated to each customer will be based on 12,000 miles a year divided by a vehicle's estimated miles per gallon.

Good.

Gas prices are going to go down soon.

No company would do this unless they were going to make money down the road. Once Bush is out and the environmental restrictions on gas has gotten a little more in line, the prices will fall. I'm guessing in two years, $2.75 a gallon will be about right.

This was my immediate thought.

 

[Ace]

So if gas goes to $2.75 a gallon, you're forced to pay $2.99? You think that's the racket?

 

[93Devil]

So if gas goes to $2.75 a gallon, you're forced to pay $2.99? You think that's the racket?

Yes.

Does everyone remember a few years ago when Best Buy was doing a deal that you could get $400 off a computer if you signed up for a certain online service provider that was tied to dail-up? You were sucker for doing it because dial-up was about to start becoming obsolete.

Why would Chrysler give you gas for $2.99 if it was going to leap to $4 or $5? If you buy 80 gallons a month they would be eating $80 a month or $960 a year. That is close to $3,000 for three years. What do you think their profit margin is on a $25,000 after they sell it to a dealer?

Or $6,000 if it jumped to $5.

If they sell 500,000 cars this year, they would possibly be paying back $2,250,000,000 or 2.25 billion. Billion.

They will go belly up if they had to do this.

I know my math might be a little screwed up, but even if they were paying back half of the amount it would be catastrophic.

 

[bigpern23]

So if gas goes to $2.75 a gallon, you're forced to pay $2.99? You think that's the racket?

Umm, if gas goes below $2.99/gallon, just don't use the card when you buy gas.

 

[cranberry]

Why would Chrysler give you gas for $2.99 if it was going to leap to $4 or $5?

For the same reason a car maker will give you zero percent financing -- to move cars out of the showroom.

 

[Mystery_Meat]

So if gas goes to $2.75 a gallon, you're forced to pay $2.99? You think that's the racket?

Yes.

Does everyone remember a few years ago when Best Buy was doing a deal that you could get $400 off a computer if you signed up for a certain online service provider that was tied to dail-up? You were sucker for doing it because dial-up was about to start becoming obsolete.

Why would Chrysler give you gas for $2.99 if it was going to leap to $4 or $5? If you buy 80 gallons a month they would be eating $80 a month or $960 a year. That is close to $3,000 for three years. What do you think their profit margin is on a $25,000 after they sell it to a dealer?

Or $6,000 if it jumped to $5.

If they sell 500,000 cars this year, they would possibly be paying back $2,250,000,000 or 2.25 billion. Billion.

They will go belly up if they had to do this.

I know my math might be a little screwed up, but even if they were paying back half of the amount it would be catastrophic.

Umm, if gas goes below $2.99/gallon, just don't use the card when you buy gas.

It's a better deal if you're buying a diesel, since that's higher than $4/gal pretty much everywhere, and it'll take a lot longer for it to drop under $3/gal.

 

[93Devil]

So if gas goes to $2.75 a gallon, you're forced to pay $2.99? You think that's the racket?

Umm, if gas goes below $2.99/gallon, just don't use the card when you buy gas.

If this works like a future, then you are locked into paying that price.

I was pitched this for natural gas a year or two ago, but nat gas stayed pretty stable compared to oil.

 

[dixiehack]

So if gas goes to $2.75 a gallon, you're forced to pay $2.99? You think that's the racket?

Umm, if gas goes below $2.99/gallon, just don't use the card when you buy gas.

If this works like a future, then you are locked into paying that price.

I was pitched this for natural gas a year or two ago, but nat gas stayed pretty stable compared to oil.

Sounds like a stock option. If the price stays above the target, you have something valuable. If it goes below, you have a paperweight. But nobody forces you to use either the option or the gas card.

 

[KJIM]

Does everyone remember a few years ago when Best Buy was doing a deal that you could get $400 off a computer if you signed up for a certain online service provider that was tied to dail-up? You were sucker for doing it because dial-up was about to start becoming obsolete.

Why would Chrysler give you gas for $2.99 if it was going to leap to $4 or $5?

Devil, I think you're crediting Chrysler with too much foresight. If they could predict the future, don't you think they would have more hybrids out there now?

 

[Stoney]

So if gas goes to $2.75 a gallon, you're forced to pay $2.99? You think that's the racket?

Umm, if gas goes below $2.99/gallon, just don't use the card when you buy gas.

If this works like a future, then you are locked into paying that price.

Well it obviously doesn't work like a future because the buyer isn't forced to use the card. If the price drops just pay with cash or another card. It gives an option, it doesn't lock em in. Isn't that just common sense?

 

[bigpern23]

So if gas goes to $2.75 a gallon, you're forced to pay $2.99? You think that's the racket?

Umm, if gas goes below $2.99/gallon, just don't use the card when you buy gas.

If this works like a future, then you are locked into paying that price.

Well it obviously doesn't work like a future because the buyer isn't forced to use the card. If the price drops just pay with cash or another card. It gives an option, it doesn't lock em in. Isn't that just common sense?

Exactly.

It's pretty clear in the story that they give you a card that allows you purchase gas for $2.99/gallon. You're not purchasing the gas in advance.

So, all you do is when you get out of your car, look at the price at the pump. If it's higher than $2.99, use the card. If it's lower, don't. This ain't advanced economics here, people.

 

[Ace]

So if gas goes to $2.75 a gallon, you're forced to pay $2.99? You think that's the racket?

Umm, if gas goes below $2.99/gallon, just don't use the card when you buy gas.

D'oh!

 

[Stoney]

So if gas goes to $2.75 a gallon, you're forced to pay $2.99? You think that's the racket?

Yes.

Why would Chrysler give you gas for $2.99 if it was going to leap to $4 or $5? If you buy 80 gallons a month they would be eating $80 a month or $960 a year. That is close to $3,000 for three years.

Assuming that worst case scenario came to pass, Chrysler would still be no worse off with that $3000 loss than if those cars never sold at all, because that IS what's happening to them now.

Perhaps you hadn't noticed but Chrysler is in dire straits right now. Their dealerships are backlogged in gas guzzling inventory all across the country. They need to move vehicles and they need to move them NOW. It's primarily desperation that motivated this idea. No doubt they hope prices drop below $2.99 and might have reason to believe it'll happen, but they've no crystal ball either.