Chrysler tries fuel-price guarantee to boost sales
DETROIT (Reuters) - Chrysler LLC will let U.S. consumers lock in gasoline prices for three years under a new incentive program launching at a time of sliding vehicle sales, rising oil prices and deepening consumer uncertainty.
The U.S. automaker, which has seen sales drop by almost 18 percent 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.
The sales incentive, which will be rolled out on Tuesday, will only cover the first 12,000 miles driven based on the estimated mileage for the Chrysler car or truck purchased, executives with the privately held automaker said.
The novel Chrysler incentive offer is introduced at a time when high gas prices have hammered sales of the SUVs and trucks that dominate Chrysler's line-up.
"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.
Chrysler, now owned by Cerberus Capital Management CBS.UL, said it would hedge its financial exposure to rising gas prices as a result of the incentive offer.
Other automakers have experimented with pre-paid gas cards as an alternative to traditional showroom incentives, such as cash rebates and zero-percent financing.
But Chrysler said its program marked the first effort to set a ceiling on fuel prices for consumers across the United States and was prompted by its own research showing that uncertainty about gas prices had become a major drag on sales.
"One of the things that weighs heavily on people's minds is the volatility of fuel prices," said Jim Press, Chrysler's vice chairman and sales chief.
Chrysler said its "Let's Refuel America" program would be offered for May and would exclude gas-thirsty performance cars like its Dodge Viper and new Challenger muscle car.
Because of the way the program is structured, it amounts to a heavier subsidy on bigger, less-fuel-efficient vehicles.
For example, the program would cover some 2,100 gallons of fuel for an entry-level Dodge Ram pickup but only about 1,300 gallons for the Dodge Caliber, currently the smallest car in Chrysler's line-up, based on published mileage estimates.
Chrysler said a more detailed estimate based on gallons of fuel covered by the guarantee would be available this week.
Based on the current national average of $3.61 per gallon for regular unleaded as tracked by AAA, the incentive would be worth about $1,300 for the pickup truck and about $800 on the smaller hatchback.
Chrysler said consumers would have the option of choosing between the fuel-price cap and more traditional incentives. Continued...
