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Auto Dealers Use Prepaid Gas Cards and Gas Station Credit Cards to Entice Buyers

With gasoline prices in the United States surging ahead at a breakneck pace, buyers who once embraced big oversized trucks and sport utility vehicles (SUVs) are turning away from gas-guzzlers, a move that’s putting the squeeze on both automakers and auto dealers.

None have been hit harder than Chrysler, which relies on trucks and SUV’s for 70 percent of its sales. They reported that sales were down by as much as 23 percent during the first four months of 2008. That may be why Chrysler was the first major automaker to offer what is clearly becoming the most popular incentive of the season—gasoline.

After that dismal 4-month downturn, the maker of Chrysler, Jeep and Dodge vehicles announced it would guarantee that their new customers would never pay more than $2.99 per gallon for gas for the next three years—no matter how high gas prices rise at the pumps.

In a creative marketing move, Chrysler has arranged for its customers to get a special credit card to be used for gas purchases. Customers using the card will be billed $2.99 per gallon to their charge account and Chrysler will pay the rest.

The guarantee, which is offered on 32 models, covers up to 12,000 miles annually for three years, and allows customers to buy gas anywhere they choose. The incentive also follows the vehicle if it is sold, allowing anyone that owns the car during the three-year period to take advantage of the gas incentive.

Suzuki, whose new car sales have been less affected, quickly followed suit by offering free gasoline to US buyers, but only for the summer of 2008.

Industry observers have stated they do not expect free or discount gasoline to take the place of the once most-favored incentive for new car buyers—cash rebates. As critics of the industry are quick to point out, gas giveaways do nothing to address the underlying problem. Gas prices will undoubtedly continue to rise and gas supplies will continue to dwindle.

The problem with this type of campaign is that it is not really solving the problem, but covering it up. With this promotion, Chrysler it seems, is actually encouraging people to go out and buy bigger trucks and SUVs simply because they get a rebate on their gas. But since these trucks and SUVs get much less miles-per-gallon than smaller vehicles, the buyers are going to have to fill up much more often than they would if they downgraded to a smaller, more fuel-efficient car.

Using more gas is only going to make demand for it go up. And when demand goes up, so does the price.

The only real, long-term solution to easing pain at the gas pump, most will agree, lies in developing vehicles that are more fuel-efficient as well as vehicles that use alternative fuel sources. Even though America only has 4% of the world’s population, it uses accounts for 25% of the world’s oil consumption. The smart thing to do is to try and use less gas, not use more at a cheaper price.

In the words of one industry observer, “The days of driving on cheap fossil fuels are as dead as the dinosaur.”

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