Richer by the Day
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Chrysler recently announced the Let’s Refuel America program which locks in gas prices at $2.99 per gallon. Here’s a clip from the press release followed by an analysis of whether the deal is worth it.

From the press release: “In response to direct customer feedback citing the prospect of rising gas prices as a top concern, Chrysler LLC today announces its own economic stimulus package: an exclusive gas price protection policy that eliminates the risk of further spikes in fuel prices. With the U.S. purchase of eligible Chrysler, Jeep and Dodge vehicles, customers can enroll in the “Let’s Refuel America” program and receive a gas card that immediately lowers their gas price to $2.99 a gallon, and keeps it there for three years. The offer is available at 3,511 U.S. Chrysler, Jeep and Dodge dealerships through June 2, 2008, and is available on vehicles ranging from popular new compacts, crossovers and minivans to full-size diesel-powered pickup trucks.”

The analysis:

The first thing I noticed is that the Let’s Refuel America program must be selected in lieu of other incentives. Determining if the deal is worth it to you means that you’ll have to compare the value of the program to the other deals you have to give up to get it. Second, a yearly allotment of 12,000 miles limits the amount that you can truly save. Converting miles to gallons allowed will use the EPA combined fuel estimate for the vehicle in question. Third, the program charges the gas to your credit card after the transaction is made. If you would normally pay for gas with cash or don’t pay off your credit card in full each month, the interest on the gas purchases (even at $2.99 a gallon) can quickly make the price more expensive for you. Lastly, though I don’t expect gas prices to come down over the next three years, if prices fall, the value of the program decreases. If they had made the price equal to 25% below the average price in the US, or something along those lines, that would have offered protection against potentially lower prices in the future.

Looking at a typical Chrysler, the Sebring, gives you an idea of the potential savings. With its 21 city/30 highway mpg, 12,000 miles per year will require about 471 gallons of gas. Assuming that gas averages $4.50 over the next three years (Which is the same as $3.50 this year, $4.50 next year, and $5.50 the year after that), the program will save you $2,133.63 over the next three years. It’s not uncommon for other dealer incentives to be more than that. Saving more on the price of the car up front is much better than saving less through low priced gas. If you take out a loan on the car, the up-front savings are even greater. The finance charges on the higher purchase price that results from selecting the Let’s Refuel America program instead of opting for a lower price through another dealer incentive will compound to really make a huge difference. I would not be surprised if some people who choose the Let’s Refuel America program end up spending an extra $5,000-$10,000 over the life of their car as a result.

The Chrysler gas card is an ingenious program because it capitalizes on an issue that is currently on everyone’s mind: high gas prices. Whether or not it will actually save you money is highly dependent on the other incentives you give up, the number of miles you drive, the potential other costs of using your credit card to pay for the gas, and the volatility of future gas prices. Going out and spending money on a new car, in order to “save” on gas, will probably end up leaving you worse off than if you bought a used car, or no car at all. Let’s Refuel America is more of a gimmick to make up for lagging sales than anything else. It’s possible that this program will save you money, but much more likely that Chrysler will be the ones who profit the most.

More on this topic (What's this?) Read more on Chrysler, Oil at Wikinvest


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9 Responses to “Chrysler Gas Card”

  1. Jason Says:

    I’ve been reading about this program all morning and I have a couple of tidbits to share.

    First, the way the program works, the “EPA combined fuel estimate” is used to determine how many gallons you get. Chrysler will pay for discounted gas for 12k miles a year, and they use the combined estimate to get to that figure.

    Second, I think it’s an outrageous abuse of the general public’s inability to do math. I highly doubt gas goes much higher than $4 a gallon in most places, so this only saves a $1 a gallon. With some new cars and trucks having thousands of dollars in rebates, I fail to see how this can be a good deal. They should be ashamed.

    I read this article too - they explain it better than I do.

    http://www.tundraheadquarters.com/blog/2008/05/06/dodges-new-fuel-price-protection-program-is-a-scam/

  2. Mike Says:

    @Jason,
    Thanks for this additional info. I too fear that this deal is really just a ploy to get those with an aversion to math to pay more.

  3. ron Says:

    this promo perfectly targets the masses of math illiterate, shortsighted morons that are dumb enough in the first place to buy the gas guzzlers chrysler sells instead of a more fuel efficient car that would save them way more money over the life of the vehicle.

  4. Mike Says:

    @Ron,
    Well said. The fact that you’re going to need more gas to drive a Chrysler versus more efficient alternatives makes the program even more of a scam. Chrysler is smart to offer the program because it takes a negative aspect of the company (building gas guzzlers) and tries to promote it as a positive (we let you buy cheap gas). The more I think about the program the worse it seems. If you really need to buy a car, the best option of all is to buy a fuel efficient used one.

  5. David Carter Says:

    I think this program is absolutely ridiculous. It will do nothing to help reduce the cost of fuel for the rest of us. If anything, it will cause it to go up. Why doesn’t Chrysler just try to build more efficient cars?

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