I wrote a few weeks ago about Chrysler's new sales gimmick: buy a new Chrysler and pay no more than $2.99 a gallon for gas for three years.

Well it seems that the sales promotion is working, at least in the short run. Chrysler is reporting that sales in May are up 15% compared to April. Vice Chairman Bill Jim Press has announced that the offer will be extended until after the July 4 holiday.

But the real question is whether this is enough to turn Chrysler around. I was skeptical when I first heard about the plan, and I remain so. The cheap gas promotion is no doubt increasing foot traffic at Chrysler dealers and even moving some sheet metal, but the overall picture for Chrysler remains pretty bleak. Chrysler sales are down 18% for the year, and sales in May 2008 will be weaker than in May 2007 even with the promotion. So the cheap gas offer is probably just filling a few holes in a sinking ship.

Current projections call for fewer car sales in 2008 than in 2007, with the American car market shrinking by something like one million cars, down to 15 million. Given the poor mileage of most Chrysler products, I suspect that even with the $2.99 gas sales promotion, a disproportionate number of those unsold vehicles will be Chryslers. Even guaranteed cheap gas can't disguise the fact that Chrysler isn't selling the well-designed, fuel efficient cars that Americans are increasingly demanding.