Chrysler counterpunch: Free gas, maintenance New incentives include 2 years of fuel, scheduled services November 18, 2005 BY SARAH A. WEBSTER and MARK PHELAN FREE PRESS BUSINESS WRITERS LAS VEGAS -- After General Motors Corp. launched its year-end Red Tag sale and Ford Motor Co. announced its Keep it Simple program this week, Chrysler Group came to the showroom Thursday with a cleverly wrapped deal of its own: Two years of free gasoline and scheduled maintenance. Chrysler's new Miles of Freedom deal, which runs from Monday through Jan. 2, also will include a 5-year warranty on most of its vehicles. Buyers will get a $2,400 debit card under the program, which they can use for gasoline or any other purchase at qualifying retailers. Chrysler set the card's value by multiplying a gasoline price of $2.15 a gallon by 24,000 miles of travel by Chrysler's corporate average fuel economy of 21.8 miles. The deal applies to all Chrysler, Dodge and Jeep vehicles except the Dodge Viper, Magnum, Charger, Sprinter, Chrysler 300 and the group's high-performance SRT8 models. The deal is available as an alternative to Chrysler's existing cash offers, which run as high as $7,000 on a Dodge Durango SUV. According to Chrysler's research, 71% of customers said the offer makes them want to buy a Chrysler, Dodge or Jeep vehicle, Julie Roehm, director of marketing communications for Chrysler Dodge and Jeep, said. "It reduces the unknowns, the cost of gas and maintenance," Roehm said. Chrysler's latest program seems to piggyback on efforts by Mitsubishi, which started a Gas Comes Standard promotion in September, and General Motors Corp., which offered a $500 gas card in October. Alan Helfman, general manager of River Oaks Chrysler Jeep in Houston, said the new deal is far more appealing than the ones being offered by GM and Ford: "This blows 'em away." GM, Ford and Chrysler are all boasting about how simple their new programs are for consumers. But none of the programs is meant to be haggle-free, where everyone pays the same price. Jim Sanfilippo, an industry analyst with Automotive Marketing Consultants Inc., said that is what consumers really want. They want "a transparent price," he said. Incentives on cars and trucks, it seems, were actually simpler a short time ago: they were all about the cash, the no-interest financing, and who was offering the most of it. But the expensive game of one-upmanship, which GM started after the Sept. 11 terrorist attacks to keep the market humming, hit an alarming speed bump at the end of 2004. That's when the rebates crossed the $7,000 mark on new trucks and SUVS. While that ballooning amount was eating into profits, it was also about enough to cover the cost of a compact car. Some clever dealers started giving away the Chevy Aveo and Ford Focus with the purchase of a new truck. Unprepared to start giving away their cars for free, automakers rushed back to the drawing board. Since then, auto incentives have become all about the packaging. But consumers will have to closely inspect the details of these new deals to see whether they are getting a better deal on their new vehicle or a smaller deal cleverly wrapped in a more appealing package. That's because the marketplace has become increasingly confusing, despite the seemingly simple incentive programs. The price has been going up on some vehicles and down on others. And, overall, the amount automakers actually discount their vehicles has been shrinking. The average incentive, which includes cash-back rebates, special interest rates and other discounts, fell 4.1% for the first 10 months of the year, to an average of $2,870, according to Autodata Corp. of Woodcliff Lake, N.J. Last year, automakers gave consumers about $2,992 off their new cars and trucks. Automakers do not publicly release how much they spend on incentives. So a few automotive intelligence firms, such as Autodata, release their best estimates. Domestic automakers are cutting their deals the fastest, according to Autodata. GM and Ford have both said their latest sale prices are not as good as the deals on older-model vehicles over the summer, when the automakers were offering employee pricing programs. Chrysler, meanwhile, won't reveal how much its new program will cost it, but the total is likely to be less than the value of the cash rebates it used to pay. "We're trying to get away from tying a specific dollar value to discounts," George Murphy, Chrysler Group senior vice president of marketing, said. For the year though October, the overall auto market is up 1.2%. While sales were down 3.4% at GM and 3.7% percent at Ford, they are up 5.5%at Chrysler. Contact SARAH A. WEBSTER at 313-222-5394 or swebster@freepress.com. Web source: http://www.freep.com/apps/pbcs.dll/article?AID=/20051118/BUSINESS01/511180437/1014
