This weekend I saw a commercial for a Chrysler car that would come with $2.99 gas for three years (up to 12,000 miles a year). They announced the deal last week and Suzuki soon followed with a deal for up to three months of free gas, up to $470 for the summer.The Union of Concerned Scientists called Chrysler's offer a gimmick that tries to "fool consumers into overlooking its vehicles poor fuel economy and environmental performance." The concerned scientists figured that the deal would only save consumers $400 a year. Boosting mileage by just three miles per gallon would give drivers the same financial bonus -- and would add up to $3,000 over the life of the car.
Of course, the worried scientists came up with these stats all the way back when gas was only $3.61 a gallon. Now it's $4, so the savings would be more like $650 a year. But their point about the lifetime savings from fuel efficiency is even stronger. (I don't know all the parameters they used in this part of the formula, but my guess is the lifetime savings would go up to about $5,000).
Car makers aren't alone in making these pitches. Dinesh Ramde of the Associated Press says all kinds of companies are piling on the free or discounted gas bandwagon. Callaway Golf (NYSE: ELY) will give a $100 gas card to buyers of certain drivers; hotels.com is handing out $50 gas cards.
The straight dollar amount cash deals, especially from non-automotive or travel companies, seem to play on the current hysteria about gas prices. If a company wants to save me $50, they can give me $50 off. Anything else is a gimmick where someone is calculating that a certain percent of us won't follow through on the hassle.
The Chrysler deal strikes me as something different. Sure there are all kinds of catches: you don't get it for four to six weeks, it's only at participating stations, it's only for regular (up to 87 octane). Yes, Chrysler might be better off spending the money on developing higher mileage cars, but right now it's got to unload what it's already built. Their $2.99 gas card is a kind of new financial instrument. The higher gas goes above $2.99, the more it's worth (and the more Chrysler has to pay). As press-grabbing gimmicks go, it's a pretty interesting one.
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