Chrysler's "Refuel America" promotion guarantees $2.99/gallon gas, diesel or E85 for three years. The deal was originally set to expire on June 2. The Detroit News announces that the struggling automaker's extending the offer through July 7. It sure sounds like a good deal… you get a gas card that's linked to your Visa or MasterCard credit card (no debit cards). When you buy gas, your card is billed at $2.99/gallon and Chrysler pays the rest – within certain limits. The cap is capped at the amount of fuel needed to go 12K miles based on the EPA combined mileage for your vehicle. If you try to use your gas/E85 card to buy diesel, or have a diesel card and try to buy gas/E85, you're charged "full pump price plus a $2 service fee per transaction." If gas drops below $2.99, you'll be charged at the lower price BUT the purchase will count against your annual allotment. Once you exceed your annual allotment, you'll be charged the full price until the next year's allotment kicks in– but if you don't use all of this years' allotment, the remainder is forfeited when the new allotment is activated. Oh, and if you follow all the rules and buy a Dodge Durango (the thirstiest car Chrysler sells excluding the excluded SRT models and Dodge Viper), you'll save around $600 a year, depending on local gas prices. Oh, did I mention you may have to forfeit other, more valuable incentives to qualify? Someone, somewhere is laughing.
Find Reviews by Make:
Read all comments
So very true, Frank. Thanks for exposing the scam. But gas prices scare people into making uninformed decisions, so that scheme may well help chrysler sell a few more models. It’s cheaper than investing in good product…
“But gas prices scare people into making uninformed decisions.”
See 2008 Election, The.
Sounds like this is just marketing buzz, and it is getting attention better then just offering the typical incentives.
Sure, after reading the fine print, 99% of buyers will take in most cases the bigger incentives.
Brendino:
Sad, but true. I wouldn’t call it a scam. It’s a smart move because consumers are generally idiots who just follow the latest trends and hysterias.
Airhen :
Sure, after reading the fine print, 99% of buyers will take in most cases the bigger incentives.
I bet only 20% of buyers will read the fine print. And salesmen will do everything in their power to make sure they don’t understand it if they do.
I did the math recently at it came out to a “present value of rebate” of something like $1,500-$2,000 over the three years (at a modest discount rate). In other words, this is probably a nice way to wean people off of the cash-on-hood while garnering some media attention at the same time.
And thanks for the extra details above.
ash78 :
I did the math recently at it came out to a “present value of rebate” of something like $1,500-$2,000 over the three years (at a modest discount rate). In other words, this is probably a nice way to wean people off of the cash-on-hood while garnering some media attention at the same time.
Except… they still have cash on the hood of a lot of models along with the gas deal. The rebates aren’t nearly what you can get if you don’t opt for the gas (they run in the $500-1,000 range on cars and up to $3k on trucks if you take the gas deal) and aren’t offered on their hotter-selling models. However, giving up a $5K rebate to get $1k back and (hopefully) a 3-year gas savings that may total $2K isn’t the best deal. Unless gas prices really skyrocket and you drive enough to use the full 12k mile allotment on the card in a year, the gas card isn’t the way to go.
Wow, I didn’t know that a marketing incentive program with rules is now classified as a SCAM.
Evil Chrysler, on top of being a horribly run American car company, is now also a Communist Al-Queda who hates Mother Earth! Who knew!
If the price of gas climbs to $7/gallon in the next few weeks (and stays there for the next three years), this is a very good deal for the consumer who opts for this deal. The rest of us will slit our wrists. Then the consumer will as well when his new Dodge Fuelsucker has been orphaned by its BK car builder, finally done in by “market circumstances.” (Good luck with that lifetime warranty, pal.)
However if the price of gas comes back down to the anticipated $3.and-change soon, the consumer is screwed and Chrysler laughs all the way to the bank. So much better for the buyer to have taken a cash back deal up front, rather than hoping the deal gets richer over time.
Like the Employee Discount for Everyone, this is merely a way of calling cash rebates…um, something else. Anything else.
As for Chrysler, they’ll find what GM did a couple years earlier…that gas-rebate promotions don’t work. It gets people talking. Kinda. But not buying. Worse, most of that “talk” is negative, as in, “They wouldn’t need to do that if they built more economical cars. Like Honda. Or Toyota.” And that’s not just the media talking, either.
But no, Chrysler got this concept foisted upon them by the dealer body who wanted this. “We do gas promotions all the time,” claimed the dealers. “Yeah, just give ’em free gas with a purchase. Works great.”
Well, maybe on a local, single-dealer scale it does. But on a national, manufacturer level, it doesn’t. Won’t.
I see Frank already did the math while I was typing away.
A-Rod is right (and we’re glad to have him back in the line-up!)
Every carmaker has discounted lease rates, but the fine print says that you need a FICO above 700. The point of any promotion is to increase traffic into the dealership. Given the horrible fuel mileage of Chrysler’s fleet, $2.99 gas is a smart sales pitch.
Thank you for this. I too saw the ad, and to me it smelled of scam. I was hoping that you would look at it and find the weasel words they slipped in there.
So what happens if Chrysler doesn’t last for 3 more years? Is the promotion insured?
Did Chrysler buy a fuel futures contract for 3 years to lock in a price for themselves? If not, is there a limit on how much per gallon Chrysler will tolerate before they tell the owners “Too bad. You pay the rest”.
Also, this promo does nothing to help the buyer with their resale value after 3 years. Good luck trying to find a buyer for your gas guzzler when gas is $7/gallon.
Chrysler figured out to take advantage of the SUCKERS!!! Instead of giving $5k in rebates on a Durango – let’s give them up to $600 a year with the $2.99 gas card.
The smart customer would take the $5k and put it in the bank to pay the gas credit card bills.
i work for a direct mailing company. im the artist that designs all the junk mail for you local car dealer that ends up in your trash can!
i can tell you that this is NOT a scam compared to what the dealers pull off at a local level. you know those, “Start the car and win it” deals. well there really is a winning key that will start the car. in fact we have a box full of them. if you read on the back it says the odds of winning are 1:60,000…yet we only sent out 30,000 pieces so no one wins!
something i also noticed…90% of my ads are for Ford, GM or Chrysler. The another 5% are for toyota, then the last 5% split between the other brands. i find the brands that are considered “successful” right now tend to supply the dealers with a mailing campaign to strengthen the brand as a whole rather then each dealer trying to out due the guy down the street.
in regards to the gas promo. its not a scam, its GREAT marketing. i hope it works out for Chrysler.
Hey, I have to agree with Alex Rodriguez on this one….
It’s fair enough to point out that the scheme has a lot of restrictions in the small print that make it less attractive then it might at first seem. It is also fair to point out that most buyers would probably be better off opting for a simple cash rebate instead….
….but branding the scheme a “scam” implies that it is in some way a con-trick or actively dishonest – which it does not actually appear to be?
I’m no big fan of Cerberus/Chrysler or the way they are running the business these days but this promotion is no more sinister than most other marketing schemes.
I wouldn’t call this a scam, but I would call it a lose-lose situation for the customer. Consider the situation where gas prices stay level for the next couple of years; in that case the value of the card isn’t very high.
But consider the case where gas prices skyrocket to $7 or $8 a gallon. The card will be worth a few thousand dollars to a Durango owner, but what will the 3-year-old resale of the Durango be? Prices on used guzzlers are already bad, but what happens when even the most thick-skulled consumers realize that $7/gallon is here to stay. You’ll lose your shirt on resale value or lose your shirt on gas after the 3 year period if you keep the truck.
Consider instead if you bought one of Chrysler’s more efficient small cars. In that case you won’t lose quite so much in resale value and you won’t be so bad off paying for your own gas. On the other hand, the card still isn’t worth much even at $7/gallon if you are only allowed to by 450 gallons a year.
Calling this a scam is highly dubious. I’m disappointed, and I think you should change the headline to something less inflamatory. Scam implies something either illegal or at a minimum highly misleading. This promotion is, from everything I can tell, completely straightforward.
It might not be a great savings for consumers, but then again what promotion is? Companies wouldn’t offer “deals” if they didn’t expect to make money on them.
Also, on a purely intellectual level, doing the analysis on a post hoc basis with static gas prices (“if gas costs $X it’s a good deal, if $Y it’s a bad deal”) ignores the option value – even if gas never goes to $10 there is value to the consumer in being protected from that possibility.
yankinwaoz:
Did Chrysler buy a fuel futures contract for 3 years to lock in a price for themselves? If not, is there a limit on how much per gallon Chrysler will tolerate before they tell the owners “Too bad. You pay the rest”.
The Detroit News states: Chrysler would not say how much it expects the offers to cost the company, but did say it has purchased hedging instruments to guard against the price of gas going up even further. I would imagine that legally, the only way they could terminate this three year contract with their customers would be via bankruptcy.
And nowhere do I say it’s a scam. I merely ask if it could be considered one due to the fine print, restrictions and bottom-line savings in comparison to other incentives they’re offering. After all, one definition of “scam” is “deprive of by deceit” and they certainly make this sound like the deal of the century when, in reality, it’ll end up costing many of the people who take it more in the long run than if they took the straight cash-back deal.
I don’t think the use of the word “scam” in the headline is misleading at all. The title is worded as a question and it’s up to the reader to form an opinion based upon the contents.
Personally, I don’t think it’s a scam…it’s just not as financially advantageous as the various rebates they’re offering. In the end, it really is the responsibility of the purchaser to read what they’re signing; unfortunately, people just don’t reasearch these things and thus we get situations like the sub-prime mortgage fiasco.
It’s amazing to me that people know car salesman are not the most scrupulous bunch, that they’re going to finance their puchase w/$20-30K of debt, and the product they’re buying is a declining asset (ie, liability)…yet they still claim “victim” status when it all goes wrong. I’m sorry, but I’ve lost all ability to empathize with American consumers right now.
I don’t see it as a scam – I see it as an enticement for people who:
1. have a Chicken Little attitude about gas prices,
2. are bad at math, and
3. don’t bother to read the fine print
Let’s say gas stays around $3.99 per gallon; for that $1 differential, you’d be able to get a much better rebate.
At least it probably doesn’t tank residual values the way a pure rebate does. Plus it got people talking…I think it’s a pretty shrewed idea on Chrysler’s part, and I don’t see any trickery. The same way the 0% financing is usually in lieu of cash rebate, depending on the term of the loan or size of the rebate, one or the other could be the better deal.
Frank, if a question heads an article, the implication is quite obviously that the answer is unclear. If the answer is in fact 100% clear (as in this case, where Chrysler is clearly not running a “scam”, which I think in common usage implies something more like the Nigerian email schemes) then implying that the answer might not be clear is really extremely misleading.
Let’s put it this way – if I wrote an article titled “Is Frank Williams a Spouse Abuser?”, that mostly argued that you don’t pull your weight on household chores, I think you’d find the headline misleading.
This is no more a scam than your cellphone contract. You get 12k miles of $2.99 gas or diesel per year, no rollover gallons, no fuel substitutions, seems pretty straight forward to me. Given the choice between this and a $2,000 cash incentive, take the cash, obviously. But the program is proving to be most popular with small inexpensive vehicles that are never offered with such big incentives. Also I’m sure if you did the math you could save allot more than the $600 in your Durango scenario with a diesel Ram
IT IS A SCAM !
It has the capability to fool at least some people. Everything that doesn’t tell you the truth unless you read some fine print is a scam. The fine print is a SCAM. The fact that everybody uses it from banks to the corner grochery store it does not make it any better.
How about instead of fine print they print with fair size letters the above math that shows how much you really “save”. I can tell you that would not be as attractive as it is now.
It’s the same with saying: “I don’t lie. I just keep my mouth shut and don’t tell the truth”.
Freaking SCAM!
Saying “Oh, I was just asking the question not actually SAYING it is a scam” is completely disengenous. I’m looking forward to seeing a similar headlines such as:
“Honda Executives – Do they boil Americans in a vat of oil?”
“Barack Obama – Is he really going to take your property and give it to Al-Qeida?”
“Ethanol Producers – Do they enslave small children?”
joe_thousandaire:
Good point on the cell phone contracts. Perhaps I should sue my provider because I have never used all of my minutes – clearly they are ripping me off.
brownie:
Good point on the cell phone contracts. Perhaps I should sue my provider because I have never used all of my minutes – clearly they are ripping me off.
In a way, yes. Any cell phone payment plan that is not transparent, that attempts to mislead the public or hide the true costs of a contract in the fine print, is a scam. There are many states that have enacted laws to mandate transparency on just this subject.
Caveat Emptor? Yes, of course. But that doesn’t make it acceptable to take advantage of people, especially when gullible or less intelligent members of the public.
But this is a borderline case, easily justified by the marketing people. Hence the question mark at the end of the headline.
brownie :
Let’s put it this way – if I wrote an article titled “Is Frank Williams a Spouse Abuser?”, that mostly argued that you don’t pull your weight on household chores, I think you’d find the headline misleading.
Probably not. I don’t think there’s a court in this land which would categorize not doing chores as “spouse abuse,” and no reasonably intelligent person would equate being lazy with such a crime, if that was the only allegation offered to fuel the discussion.
Frank,
I don’t know, one of the defintions of abuse is “to use wrongly or improperly; misuse”. One might argue that to have your spouse do an excessive amount of housework is spousal abuse in a literal sense – I didn’t say anything about court.
You see what I’m sayin’?
RF,
I’m talking about cell phone plans that transparently give me up to 1,000 minutes per month, use it or lose it. If I never use that many, am I getting scammed? Or is it just a fair exchange of money for services I happen to not use to the fullest?
brownie:
RF,
I’m talking about cell phone plans that transparently give me up to 1,000 minutes per month, use it or lose it. If I never use that many, am I getting scammed? Or is it just a fair exchange of money for services I happen to not use to the fullest?
We’re talking about the marketing of the offer, and the ability of its target audience to understand it. Not the plans themselves. Obviously.
RF,
How are they different? I see no deceptive advertising here – it may be a good deal or it may not, but where’s the deception? And why the assumption that everyone else is so stupid?
This is just a fuel hedge. By accepting this bet over a bigger cash rebate, you are basically doing a small scale gasoline future. You are betting the price of gasoline will go up. Chrysler is betting it will go down. You become one of the evil “oil speculators” that everybody is (falsely) blaming on the increased cost of oil.
Geotpf:
No, consumers cannot possibly be smart enough to forgo a fixed cash rebate in favor of a hedge of indeterminate value. They need US, the readers of TTAC, to protect them.
Sure, after reading the fine print, 99% of buyers will take in most cases the bigger incentives.
Like they read the fine print on their mortgages?
John