Automakers' gas gimmicks may backfire

[xcel]

Cut-price fuel might not be best way to draw in struggling drivers.

Roland Jones - MSNBC - May 28, 2008

Dodge Durango – 15 mpg combined on the 08 EPA.

Drive a stripped $30,000 Durango 36,000 miles and it will only cost you $7,200 in fuel! Trade in w/ 36,000 miles in 3 years is $8,095. Only $10,000 a year to own a FSP -- Ed.

Time was when automakers would slap a wad of cash on a car’s hood to shift it off a dealer’s lot. These days, with gasoline prices climbing to new record highs almost daily, they’re slapping down a can of gas instead.

With the summer driving season just around the corner, Chrysler recently launched its “Let’s Refuel America” program — an offer that caps the price of gasoline at $2.99 a gallon for three years for people who buy or lease new vehicles from the maker of Dodge and Jeep vehicles…

“Boy, have we gotten a great response,” Chrysler’s Vice Chairman and President Jim Press said on a conference call with reporters. “This has really resonated with the needs and the worries and concerns that customers have.”

But free-gas deals rarely work out well for automakers, experts say, and Chrysler risks coming off as insensitive for encouraging Americans to drive more at a time when soaring fuel costs are making most aware of the nation’s overuse of energy. And in some cases car buyers might be better off taking advantage of a rebate or low-interest finance deal… [Read More]

[Earthling]

I'm outraged at Chrysler stooping this low, not that I'd ever buy one of their vehicles.

This tactic reminds me of the mortgage lenders signing up people for loans who couldn't possibly repay those loans, especially if the variable rate loans ever had rate increases.

This the same mentality at work: have some intellectually-challenged individual sign on the dotted line for a gas-hog, with no thought as to what happens when the "cheaper-gas" period runs out. It's a disgraceful way to sell cars.

Harry

[laurieaw]

it's a good article, pointing out how it's not such a good plan. people would be better off financially looking at something smaller.....too bad all those manufacturers have painted themselves into a corner.

[Radio_tec]

Originally Posted by Earthling

I'm outraged at Chrysler stooping this low, not that I'd ever buy one of their vehicles.

This tactic reminds me of the mortgage lenders signing up people for loans who couldn't possibly repay those loans, especially if the variable rate loans ever had rate increases.

This the same mentality at work: have some intellectually-challenged individual sign on the dotted line for a gas-hog, with no thought as to what happens when the "cheaper-gas" period runs out. It's a disgraceful way to sell cars.

Harry

It all reminds me of that scene played so brilliantly by Claude Rains in Casablanca where he closes down the Humphrey Bogart character, Rick Blaine's, casino. He says so cynically, "I'm shocked to find that gambling is going on here," as the croupier hands him some money and says, "Here are your winnings sir!"

[atlaw4u]

This promotion says to me "Hey, we can't build fuel efficient vehicles so let us help you with the gas bill". However, what do you do with that vehicle when the promotion ends and by that time gas prices are $5.00 or more. Good luck with resale value.

[GreenVTEC]

I think this will still be the best option for those who have need of an SUV or truck.

I mean your going to loss value no matter what you get, but now at least your paying a flat fee for gas. If it's only your secondary work truck then all the better because you'll stay within the 12,000 mile per year limit.

[xcel]

Hi GreenVtec:

___I pulled the TIV from KBB on an 05 Durango with just 36,000 miles on the ticker and in good condition. If someone needs a work truck, they should consider a new Ranger or Tacoma with the 4-cyl. ICE’s and a stick or buy a used Durango for 1/3 the price of new with just 36,000 miles on it. These things are depreciating so fast you would be lucky to get $8K for it after 3 years. Some dealerships are offering such low ball offers that the SUV used car market is all but non-existent!

___Good Luck

___Wayne

[rxhybrid]

(Stepping on my soapbox!) I might get flamed for this, but people do have the right to make bad decisions. I like the idea of a small central government that keeps its nose out of my business. I see how government programs work and they are poorly executed and horribly wasteful.

I think more responsibility needs to go with the loan companies, and they should have someone who would be personally held responsible if too many bad loans are made.

States should have the responsibility to regulate which loan companies do business in their state, and the state’s attorney general should be the person who would be held responsible if they allow loan companies to give loans that can’t be pain back.

Individuals are also accountable. We are grown and have the right to make bad decisions. That is the cost of a free society. Some people do not know how to budget their money. They have to suffer from their mistakes, and hopefully they will not repeat their errors in the future. I for one take it as my responsibility to teach my children how to save and budget money. It’s a shame more parents don’t take the time to teach their children this skill.

(I have now stepped off my soapbox).

[mparrish]

Originally Posted by rxhybrid

(Stepping on my soapbox!) I might get flamed for this, but people do have the right to make bad decisions. I like the idea of a small central government that keeps its nose out of my business. I see how government programs work and they are poorly executed and horribly wasteful.

I think more responsibility needs to go with the loan companies, and they should have someone who would be personally held responsible if too many bad loans are made.

States should have the responsibility to regulate which loan companies do business in their state, and the state’s attorney general should be the person who would be held responsible if they allow loan companies to give loans that can’t be pain back.

Individuals are also accountable. We are grown and have the right to make bad decisions. That is the cost of a free society. Some people do not know how to budget their money. They have to suffer from their mistakes, and hopefully they will not repeat their errors in the future. I for one take it as my responsibility to teach my children how to save and budget money. It’s a shame more parents don’t take the time to teach their children this skill.

(I have now stepped off my soapbox).

No man is an island.

The problem with an ideology that extols freedom & choice is that that freedom inevitably breaks down when bad choices are made.

Will the family member that invests, saves, & consumes unwisely take stock of her errors and change her ways without any burden on family and friends? Nope, she'll move in with the in-laws.

Will the cigarette smoker forego expensive healthcare because his bad decision to smoke for 40 years has unfairly and needlessly raised healthcare costs for entire risk pools? Nope, he'll still go in for every emphysema treatment.

Will the FSP owner eventually say "hey, I made a bad decision. Therefore, when gas rationing comes, you get more gas Marc."? Nope, he's gonna say gimme gimme gimme.

We are all in this together, and we all pay (directly or indirectly) for the bad decisions of others. To suggest otherwise is to believe every man is an island.

We can use the power of the collective to encourage good decisions & discourage bad ones. My tax benefits on my IRA contribution are the classic example. Market distorting? Yes. Anti-freedom? Yes (how dare they tell me what I should and shouldn't do with my money). A good idea? You bet.

I do not have a profound ideological distrust of government, which serves me well and allows me to support efforts to encourage good individual behavior (more sin taxes! less retirement contribution taxes!). It must be hard to have that deep distrust AND want to "do something", as that distrust effectively ties ones hands on the public policy level.

In the end, all that is left is to have faith that the consumer has the knowledge & wisdom to make the right choices eventually. I think I've seen enough consumer choice to state emphatically that I DON'T TRUST CONSUMERS ON THEIR OWN. Their purchase of FSPs up until the very last day of cheap oil is an obvious & predictable one, and something I wish we had avoided as Europe has.

That's enough for now.

[worthywads]

Originally Posted by mparrish

Will the cigarette smoker forego expensive healthcare because his bad decision to smoke for 40 years has unfairly and needlessly raised healthcare costs for entire risk pools? Nope, he'll still go in for every emphysema treatment.

If social costs are the measure, from what I've read I am more of a drain on social costs as a non-smoker as I'll probably live longer than the smoker and draw social security for longer while still likely dying from some sort of problem that is as expensive and drawn out as emphysema.

The poor schmuck that smokes and dies after paying lots of cigarette tax and Social Security but never collects on the SS is to our financial benefit.

Maybe we should let smokers opt out of Social Security but double their Medicaire.