Free gas schemes could end up hurting carmakers

Posted Fri May 30 2008 10:17 AM by Nelson Ireson

Car buyers, especially those in the U.S., have historically been at little risk of over-thinking a purchase decision, instead relying on emotional or aesthetic factors. But as fuel prices soar, more buyers are purchasing with their heads, not their hearts, and that could drive consumers away from fixed-price fuel offers and toward rebates and financing deals.

Chrysler and Suzuki, the two main proponents of such deals in the U.S., are seeing a strong response to their offers, but analysts think the sales surge won't last. The current high fuel prices are increasing awareness of America's wasteful energy usage habits, and buyers could see the fixed-price fuel incentive as in irresponsible push to use even more at a time when the right thing to do may be to cut back fuel consumption, according to MSNBC.

More to the point, the fixed-price and free-gas deals have limits and conditions that cap the value of the program to the buyer. In the long run, car shoppers could save more with a low or 0% interest rate or a cash rebate. Suzuki's free fuel offer also requires buyers to take a 0% APR, which improves the math of the deal, but a rebate could still come out on top if it is substantial.

So far consumers that have taken the Chrysler fuel deal have done so mostly on the maker's smaller, more efficient cars, indicating those buyers are trying to maximize their fuel budgets by doing so. Suzuki's line is already populated by several fuel-efficient cars, and the analysts think the company may be making the offer in an effort to boost its brand recognition rather to help move dated and inefficient vehicles like Chrysler is doing.

Reader Comments

Fri May 30 2008 10:48 AM
chris says

agreed. the last thing companies need to do right now is give away gas, when everyone has problems regarding where its coming from and what its doing to the planet. I'm sure in 10 or 20 years we'll look back at it and laugh.. and in 100 years they'll look back on this and be scared of how ignorant we were... just like today, we are scared of how ignorant people were in the 20's when they were buying radon laced water because they thought it was good for you.
Fri May 30 2008 11:20 AM
burke says

Free gas schemes may also insult the intelligence of many people who may think that the well known gas crisis is just a crisis for certain group or class of people

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