How is this possible?

[Janna]

I don't understand this (http://www.msnbc.msn.com/id/24481436/?GT1=43001) article. How is it possible that Chrysler can do this? If Chrysler is able to do this for three years, why can't it just be that price for everyone? How are they able to set a price like that for such a long time period?

[TwinMominTX]

the difference between the $2.99 it guarantees and whatever the current gasoline prices are at the time of redemption. They will simply put the costs associated with the difference off to marketing.

[CookieMonster]

I am sure there are quite a few terms and conditions, to begin with.

Secondly, it's not all that different from offering 0% interest loans or $5,000 cash back.

They couldn't do it very long term, however, because the price of gas might do them in.

[Momto4kids]

I don't understand this (http://www.msnbc.msn.com/id/24481436/?GT1=43001) article. How is it possible that Chrysler can do this? If Chrysler is able to do this for three years, why can't it just be that price for everyone? How are they able to set a price like that for such a long time period?


I wonder if they have a "relationship" with the oil companies? AND if so it just goes to show that there is no need for gas prices to be so high.

[pmegan]

Chrysler is really hurting financially. They (like all the US manufacturers) put all their eggs in the SUV/truck basket, and no one is buying those gas guzzlers anymore. They're desperate to offload some inventory, and I think they would rather lose the money on gas than on their cars.

Here's (http://www.boston.com/news/local/massachusetts/articles/2008/05/06/frustrated_owners_try_to_unload_their_guzzlers/) a link from today's newspaper about people trying to sell their used SUVs.

[Momto4kids]

I wonder if they have a "relationship" with the oil companies? AND if so it just goes to show that there is no need for gas prices to be so high.

Ot maybe I just have no idea what I am talking about! :lol: :lol: :lol:

[Janna]

I am sure there are quite a few terms and conditions, to begin with.

Secondly, it's not all that different from offering 0% interest loans or $5,000 cash back.

They couldn't do it very long term, however, because the price of gas might do them in.

I'm not sure what terms and conditions one would have to meet in order to get that gas card. Perfect credit? The article gave no indication of that whatsoever.

In terms of the 0% interest or cash back, I understand that it's similar in nature, but for 3 years with something they can't control - esp. when today's top Drudge article is a possible $200 a barrel in the near future? I just don't understand it and more than anything it makes me wonder if Chrysler can do that, why can't others?

This is going to make me start saying and thinking things that I shouldn't, so I'm going to stop, LOL. I sincerely hope this thread doesn't become political because it was never my intention, though currently with my mindset on this, I can see how it could. Please, please lets not make this political (I'm not talking to you, Cookie monster. Just to anyone who reads this and starts to get worked up like I am, LOL).

[jmgconner]

How can they do this?

EASY! They get people to come in and buy a $20,000 car on credit. And they pay out, what, something like $355 for 3 years? They make that back in the first few months on the interest for the car loan.

[Janna]

Chrysler is really hurting financially. They (like all the US manufacturers) put all their eggs in the SUV/truck basket, and no one is buying those gas guzzlers anymore. They're desperate to offload some inventory, and I think they would rather lose the money on gas than on their cars.

Here's (http://www.boston.com/news/local/massachusetts/articles/2008/05/06/frustrated_owners_try_to_unload_their_guzzlers/) a link from today's newspaper about people trying to sell their used SUVs.

But if that were solely the case, then I would think this gas card would be valid only on SUV/truck purchases. As it stands, the article specifically says it includes compacts, minivans, crossovers, trucks and SUV's.

[Diana in OR]

Here's why they can do this...

Mileage limits are usually 12,000/year. If a car gets 20mpg., then it would use 600 gallons of gas per year. Even if gas was $4.99/gal (shudder), then over 3 years time, that only amounts to $3600. In the past, they have offered way larger discounts on their vehicles than that, so this is most likely a better deal for them.

Btw, I would *never* again buy a new vehicle from Chrysler. As everyone knows, new cars depreciate more the first year. Well, the Chrysler vehicles depreciate more than most, imo. We bought a van 4 years ago (at $6000 off msrp). Shortly thereafter, they lowered the price of all their minivans and the new ones were substantially less than the used ones. They flooded the market and lowered the price. Nice economics, huh?

[NicksMama-Zack's Mama Too]

I didn't read the article, but my guess is that Chrysler's offer is good if you financial the car through their credit company. Car dealerships make a lot of money off of the interest people pay on the money they borrow. They really hate to see people come in with their own financing.

So, they will recover some of the costs of these gas cars with their finance programs.

hth
K

[Phred]

It's not such a big deal. From this (http://www.reuters.com/article/rbssConsumerGoodsAndRetailNews/idUSN0542487520080506?sp=true)news report:

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.

The only thing is that if gas goes up to $5 a gallon the incentive could be worth more.

[chiguirre]

My guess is they'll cover their offer by buying gasoline futures so they'll lock in their price too and charge it as a marketing expense.

[Linda in NE]

that covers the estimated costs/liability of the program. The cost of that policy will be allocated to marketing expense. It would be no big deal for a large company to spend that sort of money on product promotion.

No, I do not think there's a conspiracy afoot where Chrysler gets gas at a cheaper price than anyone else.