[MacosNerd]

I'm not sure if everyone has heard about this (msnbc) but Dodge is now offering to cap the cost of gas if you buy one of their new vehicle for three years. While this is probably an act of desperation on Chrysler part. It is an Intriguing marketing ploy. I own a Honda Ridgeline. Great truck, but the car payments and gas cost is killing me. This is tempting for me, because I'd get a cheaper car to lower my payments, its mileage will be less then the truck and my gas cost will be capped at 2.99 a gallon for the next three years.

There's lots of rules and such as they only allot a certain amount of gallons per year but still...

thoughts, opinions on this.

[Dakar the Fourth]

Sounds like a great way to kill corporate profits.

[sek929]

The only downside is that you'd have to actually buy a Dodge.

[Dakar the Fourth]

*pow*

[Luca Rescigno]

Originally Posted by Dakar the Fourth 

Sounds like a great way to kill corporate profits.

Not at all. This is a great way to lure people into buying a car. High gas prices are an ever-present topic, and according to the article, it only saves you $414 a year if you get a Durango (which has very poor mileage) and drive 12,000 miles a year at $3.61/gal. Even though the price of gas will go up over the next three years, I can't imagine this saving anyone more than $600-$800 a year, which is not that much over the three years the deal is good for.

I don't think most people will actually take the time to figure out how much they save through this deal compared with how much they'd save by going for other incentives or by getting a pre-owned car instead.

[klb5090]

Chrysler criticized for $2.99 gas, Suzuki jumps on bandwagon - Autoblog

Automotive News reports that The Union of Concerned Scientists has called Chrysler's program a "cynical deal", noting that at today's current average price of $3.61/gallon, a customer would save about $400 a year under Chrysler's program. Being the smart folk they are, the scientists also pointed out that customers could save the same amount from a 3 mpg bump in fuel economy over 15,000 miles or a year of driving, and that better fuel economy also continues saving the customer money after three years.

[MacosNerd]

Originally Posted by klb5090 

Chrysler criticized for $2.99 gas, Suzuki jumps on bandwagon - Autoblog

yes but touting better gas mileage does not hit home as well as promising to cap the cost at 2.99. People feel the pain at the pump, so knowing that that they'd only be on hook for 2.99 is much more appealing then seeing a car's mpg get increase by 3 miles.

[klb5090]

Originally Posted by MacosNerd 

yes but touting better gas mileage does not hit home as well as promising to cap the cost at 2.99. People feel the pain at the pump, so knowing that that they'd only be on hook for 2.99 is much more appealing then seeing a car's mpg get increase by 3 miles.

It very well may be true but that just proves how completely idiotic people are when they buy into marketing ploys.

[analogue SPRINKLES]

How bout they just make their cars that much more fuel efficient?

[Dakar the Fourth]

That'd be like dieting to lose weight -- not gonna happen

[MacosNerd]

Originally Posted by klb5090 

It very well may be true but that just proves how completely idiotic people are when they buy into marketing ploys.

I disagree. Its not idiotic, that I have an opportunity to spend less money on gas because Dodge decided to market a gas capping program.

[peeb]

OK Macosnerd - show us the numbers - you may save money on gas for a while (or you may not, depending on the mpg) but you'll spend more to do it.

[klb5090]

Originally Posted by MacosNerd 

I disagree. Its not idiotic, that I have an opportunity to spend less money on gas because Dodge decided to market a gas capping program.

Thats true to a point, although you could just purchase a car with a very small increase in MPG for the same price or less and save money not only for 3 years but for 5 or more years depending on how long you own it and sek said it best...

you'd have to actually buy a Dodge.

[OldManMac]

IIRC, didn't you just buy the Ridgeline not that long ago, or was that another member here? Anyway, as has already clearly been posted, you're not saving much money. You'd be better off to get a couple of thousand in rebates, but Chrysler knows that, so they're appealing to your emotions (which are apparently working overtime), and not to your logic. The question that needs to be addressed is why they aren't giving rebates instead; the answer is because this works out for them, and they con somebody into buying their product without thinking of the ramifications.

[Luca Rescigno]

I will make some really broad generalizations here just to simplify the math.

Scenario 1: Buy a Dodge, get 22 mpg overall, pay $2.99 a gallon for three years, drive 12,000 miles a year.

You drive 36,000 miles at 22 mpg, so that's 1636 gallons of gas at $2.99 a gallon, so you spend $4892 on gas.

Scenario 2: Buy a more fuel efficient car that gets 25 mpg overall, pay $4.50 a gallon for three years (I'm going to just take this as a wild guess of how much gas will cost on average over the next three years), drive 12,000 miles a year.

You'll consume 1440 gallons, which is $6480 at $4.50 a gallon. Even at current prices of, what, $3.61 a gallon? Even at those prices it's still $5200 for that much gas, about $300 more than if you drive a less fuel-efficient car with the Dodge fuel credit thing.

If we assume that $4.50 will be the average price of gas over the next three years, you'll have to average 33 mpg to spend the same amount of money on gas as you would with the Dodge deal. This varies based on what you think the average price of gas will be. If you're optimistic and think it'll average only $4/gal, you'll only need to get 29 mpg, but if you think it'll average $5/gal, you'll have to get a very high 37 mpg average for the same cost. Remember, these mpgs are all to spend the same amount you'd spend if you drove a Dodge that gets 22 mpg overall, which is probably about what you could expect if you're an average Dodge Charger owner (a bit too aggressive, balanced between city and highway driving, drives 10 over the limit on the highway, etc.).

So as you can see, a simple 3 mpg jump is not enough to offset the benefit of the Dodge deal. It does in fact save you a fair amount of money. But it's still not as good as many big cash incentives, nor does it move things in the right direction of improving fuel economy and encouraging more responsible and fuel efficient driving habits.

[klb5090]

this is all very true and actually a very good representation of how this program is helpful, ALTHOUGH you must realize that the 2.99 gas kinda...ends. With a more fuel efficient car lets say 27mpgs or even your 25mpg, you would continue to save for the length of time you own the vehicle. Also your few thousand difference in gas costs over the 3 years could be offset by many things, if you come into a dealer and he uses this 2.99 gas ploy to lure you in and charge you full sticker than you could of saved 1000-1500 of sticker (still above invoice). So purchasing a car with a little bit better fuel economy and for a cheaper price or even the same price (with rebates) could be better. The moral of the story seems to be this, gas is expensive and no matter which way you do it its going to cost you thousands of dollars a year. You could drive a Mini Cooper or a Dodge Ram, make your choice. The 2.99$ gas marketing idea works well because it plays straight to your everyday experience at the pump so i give them credit for that but just like any car purchase you need research and numbers to know what is the best option for you.

[peeb]

Yep - the real issue is how long will you own the car - the first three years one thing, but after that affects the economics more.

[mindwaves]

You have to understand that this in addition to whatever rebates/incentives that they do have. It is most definitely worth it if you were leaning towards a gas guzzling vehicle like a Dodge Ram. If so, then just go for it. Sure, you can possibly save more money driving a smaller more economical vehicle, but if a Dodge is what you want, then all the more power to you. And saving money is saving money. If I could get a couple thousand in rebates in addition to saving $500 a year in gas and if I wanted a Dodge, then I would buy one right now.

[peeb]

Well yes, if you were set on a Dodge (for some perverted reason), then this is better than nothing.

[analogika]

Originally Posted by MacosNerd 

I disagree. Its not idiotic, that I have an opportunity to spend less money on gas because Dodge decided to market a gas capping program.

It's idiotic that one should choose that option over a better-mileage vehicle, since that would save you a lot more money in the long run, AND you'd be less of a wasteful asshole to the rest of the world.

[peeb]

At least Dodge is recognizing that people don't like how much it costs to run these monsters, even if their solution is the wrong one. Perhaps this will lead them down the path to making cars that people want?

[klb5090]

hopefully good ol GM will jump on this wagon and give me a darn gas lock card for 2.99 so i can get me one of them Hummer's...
SARCASM

[Eriamjh]

It's a cheap gimmick. You are better off buying a fuel-sipper in the long run. However, if you need a truck, why not?

[imitchellg5]

I think this program just shows how desperate Chrysler and Company are for sales. Honestly, I rarely see new Dodges on the road. Chrysler doesn't really have any terribly efficient cars though, so this is an okay deal if you want a Chrysler product (the only one I liked was the Crossfire, and they killed that off of course).

Oh, and to the OP, going from a Honda to a Dodge is the wrong step in build quality and longevity.

[Laminar]

Originally Posted by imitchellg5 

Honestly, I rarely see new Dodges on the road.

Rock solid evidence right there.

[sek929]

I see new Dodges all the time, but their ugliness scars my retinas.

[Luca Rescigno]

Every time I see a Dodge Nitro, I think to myself, "The person in that car thought that buying a Dodge Nitro would be a good idea."

And then I go home and weep.

[sek929]

I pointed out one of those to my dad the other day and he responded with a simple "Yuck!"

[Face Ache]

Originally Posted by MacosNerd 

I own a Honda Ridgeline. Great truck, but the car payments and gas cost is killing me.

Buy a car you can pay cash for. One that doesn't use much fuel.

The great oracle awaits your next question.

[Jens Peter]

Originally Posted by analogika 

It's idiotic that one should choose that option over a better-mileage vehicle, since that would save you a lot more money in the long run, AND you'd be less of a wasteful asshole to the rest of the world.

[Rant]
But it's impressive that there are so much fuzz about these gas prices - I mean, it's so cheap in the US! We pay $8,2 - $8,3 for a gallon of gas, over here....
[/Rant]

[turtle777]

That's it. I'll buy a Hummvee...

-t

[analogika]

Originally Posted by Luca Rescigno 

I will make some really broad generalizations here just to simplify the math.

Scenario 1: Buy a Dodge, get 22 mpg overall, pay $2.99 a gallon for three years, drive 12,000 miles a year.

You drive 36,000 miles at 22 mpg, so that's 1636 gallons of gas at $2.99 a gallon, so you spend $4892 on gas.

Scenario 2: Buy a more fuel efficient car that gets 25 mpg overall, pay $4.50 a gallon for three years (I'm going to just take this as a wild guess of how much gas will cost on average over the next three years), drive 12,000 miles a year.

You'll consume 1440 gallons, which is $6480 at $4.50 a gallon. Even at current prices of, what, $3.61 a gallon? Even at those prices it's still $5200 for that much gas, about $300 more than if you drive a less fuel-efficient car with the Dodge fuel credit thing.

If we assume that $4.50 will be the average price of gas over the next three years, you'll have to average 33 mpg to spend the same amount of money on gas as you would with the Dodge deal. This varies based on what you think the average price of gas will be. If you're optimistic and think it'll average only $4/gal, you'll only need to get 29 mpg, but if you think it'll average $5/gal, you'll have to get a very high 37 mpg average for the same cost. Remember, these mpgs are all to spend the same amount you'd spend if you drove a Dodge that gets 22 mpg overall, which is probably about what you could expect if you're an average Dodge Charger owner (a bit too aggressive, balanced between city and highway driving, drives 10 over the limit on the highway, etc.).

So as you can see, a simple 3 mpg jump is not enough to offset the benefit of the Dodge deal. It does in fact save you a fair amount of money. But it's still not as good as many big cash incentives, nor does it move things in the right direction of improving fuel economy and encouraging more responsible and fuel efficient driving habits.

That's an awful lot of work there, and kudos to you for it, but if your basic assumption is that you're going to just THROW AWAY THE CAR after three years, you need to get out of that maths class and do something with your life.

Point is: The Dodge deal is good for three years, after which gasoline prices immediately explode to whatever is regular price.
If the current trend continues,
1.) if you sell the car immediately, resale value for gas guzzlers is going to be abysmal in three years, and
2.) if you keep the car, the better-mileage car will keep saving increasingly MORE each year, as gas prices continue to increase.

[Luca Rescigno]

I did some more figures.

Over the course of 12 years @ 12,000 miles/year (144,000 miles), a 22 mpg Dodge (with the three year gas credit) will cost a little over $34,000 in gas if you assume an average gas price of $6/gal over the next 12 years. I wouldn't be surprised if $6/gal seems cheap 12 years from now, but again we're talking about averages.

Meanwhile, a 27 mpg non-Dodge will cost about $32,000 in gas over 12 years. So over most of the life of the vehicle, getting a car with 5 mpg more will save you some money in the long run.

There are a million little calculations you can do based on different assumptions, though, and it would be possible to make nearly any point with them. So really, these figures aren't important. We're assuming the Dodge you get will be getting 22 mpg. That might hold true for a Charger, Nitro, or Caravan, but if you get an Avenger you'll probably get more like 25 mpg, and if you get a Caliber you'll probably get closer to 28 mpg. Many people are also going to go for the gas-guzzling Durango, in which case the savings will be more pronounced (in the short term only, of course).

Just look at all the things that might affect these calculations:

1. The fuel economy of the Dodge (could vary from <15 mpg to >25 mpg)
2. The fuel economy of the alternative car
3. The willingness of someone who's interested in a particular model to purchase something that gets much better fuel economy. If someone's looking at a Durango, they're probably not going to be interested in a 27 mpg car. In other words, comparing a 27 mpg car to a 22 mpg car is comparing apples to oranges.
4. How much you drive it. I think Dodge's deal only covers up to 12,000 miles per year, and many people drive more than that. If you drive more, the cost savings are less. Once the deal expires, it's based solely on which car gets better fuel economy.
5. How long the car lasts. I chose 12 years and 144,000 miles because it seems to make sense and it follows the same rate that I used before, but after 12 years most of my cars have more than that many miles on them. Also, as cars get older, they get less efficient.
6. The available cash incentives for the Dodge and for other vehicles.
7. The price of gas over time. If it gradually increases over 12 years, you'll spend less overall. If it spikes upwards in the next three years, the Dodge has a bigger advantage. If it spikes upwards after the three-year deal is over, then the deal is no longer as favorable. And when will gas prices plateau again, if ever?

There are just too many factors to consider. I could have easily spun the numbers to demonstrate that the gas credit is more beneficial or less beneficial to people in the short or long term. I picked what seemed like reasonable estimates, but this is really a situation where the best way to analyze it is not to do a bunch of number crunching but to just think about things for a few moments.

The point is, the gas credit will save you a not-insignificant amount of money over the three years it'll be active, and that goes a long way towards offsetting the total cost of gas over the lifetime of the car. But it is really just delaying the inevitable. Instead of gradually paying more, Dodge owners will just be putting off higher gas prices until three years from now, and they'll see their monthly gas expenses shoot up by a large amount instead of being able to gradually get used to it.

It just doesn't seem like a good deal to me. It's marginally worse than cash back deals, the benefits take longer to realize, and over time you lose out anyway (unless you get a Dodge Caliber).

[MacosNerd]

Originally Posted by Luca Rescigno 

Scenario 2: Buy a more fuel efficient car that gets 25 mpg overall, pay $4.50 a gallon for three years (I'm going to just take this as a wild guess of how much gas will cost on average over the next three years), drive 12,000 miles a year.

That's the wild card in your equation. My guess is that gas is going to hit 4 dollars this summer, 5, next and 6 the following. I have no real insight on this other then seeing the trend lately.

[ctt1wbw]

Originally Posted by sek929 

The only downside is that you'd have to actually buy a Dodge.

Not really. I have a 2005 Durango with 94k miles on it. I've gone through one set of brakes, one set of tires, and it's only broken down once and that was when the belt tensioner broke. Three hundred bucks in maintenance costs over 94k miles isn't bad. I'd buy another Dodge in a hot minute.

[ctt1wbw]

Originally Posted by analogue SPRINKLES 

How bout they just make their cars that much more fuel efficient?

My wife's Durango SLT Hemi gets very good mileage on the highway, especially for a 5.7L V-8. We can make it from Norfolk, Virginia all the way in to Florida on one tank of gas. That's with 4 people and luggage for a week.

[TETENAL]

5.7l V8

That's more than two Formula One cars!

If you describe the mileage you get out of such a car as "very good" then the fuel in the US must be incredibly cheap.

[ctt1wbw]

Originally Posted by imitchellg5 

Oh, and to the OP, going from a Honda to a Dodge is the wrong step in build quality and longevity.

Why do you say that? Not all Dodge's are made in the US, if that's where you're going. And I'd buy a Dodge over ANY Honda, ANY day of the week. See my above post about my Durango.

[Dakar the Fourth]

Somebody's taking things a little too personally.

[Eug]

Originally Posted by Luca Rescigno 

Not at all. This is a great way to lure people into buying a car. High gas prices are an ever-present topic, and according to the article, it only saves you $414 a year if you get a Durango (which has very poor mileage) and drive 12,000 miles a year at $3.61/gal. Even though the price of gas will go up over the next three years, I can't imagine this saving anyone more than $600-$800 a year, which is not that much over the three years the deal is good for.

I don't think most people will actually take the time to figure out how much they save through this deal compared with how much they'd save by going for other incentives or by getting a pre-owned car instead.

I agree with the original poster. A bandaid marketing ploy. It may be effective in the short term to move units, but it will of course eat into profits greatly on a per unit basis. However, that may be the intent. Perhaps they are working on some vehicles with better gas mileage, but can't get them out soon enough. Or perhaps they've just been caught flatfooted and don't know what else to do.

In the meantime I'm happy I purchased a hybrid 4 years ago. Mine's a midsize Prius, but it uses less gas than the sub-compact Yaris. (My GF has a Yaris.) The ironic part is my main reason for buying it wasn't even because it was so good on gas. I only put about 15000 km per year on the thing, and I never expected oil to be $124 a barrel in 2008.

[Wiskedjak]

Originally Posted by TETENAL 

5.7l V8

That's more than two Formula One cars!

If you describe the mileage you get out of such a car as "very good" then the fuel in the US must be incredibly cheap.

"Very good" is highly relative.

[Eug]

Originally Posted by ctt1wbw 

My wife's Durango SLT Hemi gets very good mileage on the highway, especially for a 5.7L V-8. We can make it from Norfolk, Virginia all the way in to Florida on one tank of gas. That's with 4 people and luggage for a week.

What distance?

The Durango 5.7L Hemi is rated for 18 mpg highway, which translates to under 500 miles on its 27 gallon tank ($100 fillup).

That's not bad for a 5.7L truck, but it still is terrible in the greater scheme of things.

[MacosNerd]

Originally Posted by imitchellg5 

Oh, and to the OP, going from a Honda to a Dodge is the wrong step in build quality and longevity.

I disagree, while I really do like my honda, I've always bought dodge and I've almost always had good luck with them. This is my first honda and I'm quite pleased with the build quality and items included.

With that said I'm finding that between the car payments and the gas, my budget is taking a serious hit. Perhaps it was wrong of me to jump up to the ridgeline as ti was a reach in terms of affordability. If I can get a decent trade in amount, a decent price off one of the models and with the gas card program I could conceivably save between 200 and 300 dollars a month

I'm a point where it matters less what I drive and more what I have in the bank. Perhaps I should have been at the point before I purchased the ridgeline, but I wasn't. I want to see if I can rectify that situation. Provided the numbers fall into place. If they don't offer what I think the truck is worth and provide a price only a few percentage points off of invoice, I'll walk.

[zerostar]

Luckily the ridge-line has kept very good value so your trade should be good, but honestly I would throw it up on ebay, the 2K (average) more you will get will make up for any silly gimmick. Then go buy yourself a Civic Hybrid, they are really solid cars and average 42MPG, it will save you much more in gas no matter what the price.

[Eug]

Heh. Interesting:

Q. Do I have to use the card with the Chrysler vehicle that was purchased?
Answer: No, although this card is intended to be used with the Chrysler vehicle that you purchased, you can purchase fuel for any vehicle provided you use the same type of fuel allowed on your card.

However, there is a limit to how much $2.99 gas you can buy obviously. The maximum for say the Durango is 800 gallons per year (or 30 fillups). For some other cars the allotment is maxed out at 500 gallons per year.

With $3.60/gallon gas, that works out to roughly $488 and $305 per year respectively. Not very impressive.

[zerostar]

Originally Posted by Eug 

That's not bad for a 5.7L truck, but it still is terrible in the greater scheme of things.

Yes, thats pretty awful. Not that my monstrosity does any better, but at 19 its nothing to brag about thats for sure!

[zerostar]

Originally Posted by Eug 

However, there is a limit to how much $2.99 gas you can buy obviously. The maximum for say the Durango is 800 gallons per year (or 30 fillups). For some other cars the allotment is maxed out at 500 gallons per year.

Well, thats a kicker, I do a SMALL amount of driving, and in a 13-19MPG vehicle I fill up ever week, so what do I do the other 22 weeks I still need to fill up?

[Dakar the Fourth]

Originally Posted by Eug 

Heh. Interesting:

Q. Do I have to use the card with the Chrysler vehicle that was purchased?
Answer: No, although this card is intended to be used with the Chrysler vehicle that you purchased, you can purchase fuel for any vehicle provided you use the same type of fuel allowed on your card.

However, there is a limit to how much $2.99 gas you can buy obviously. The maximum for say the Durango is 800 gallons per year (or 30 fillups). For some other cars the allotment is maxed out at 500 gallons per year.

Corporate profits don't looks so bad anymore.

I wonder if we'll look back in 20 years as one of the gimmicks that marked the start of a massive decline in SUV sales.

[zerostar]

Originally Posted by Dakar the Fourth 

Corporate profits don't looks so bad anymore.

I wonder if we'll look back in 20 years as one of the gimmicks that marked the start of a massive decline in SUV sales.

I think we are past the massive decline in SUV Sales, they are WAY off this past year and are getting worse every day. Some smaller dealers won't even take anything larger than an explorer back on trade now.

Sales fell 32% this year, that is MASSIVE for the auto industry.

Mish's Global Economic Trend Analysis: Death of the SUV

[Eug]

Originally Posted by Dakar the Fourth 

Corporate profits don't looks so bad anymore.

I wonder if we'll look back in 20 years as one of the gimmicks that marked the start of a massive decline in SUV sales.

Yup, and I added to my above post later:

With $3.60/gallon gas, that works out to roughly $488 and $305 per year respectively. Not very impressive.

IOW, you'll save roughly $1500 over three years with a Durango with this program, and less than $1000 with some of the other Chrysler models, assuming gas prices stay relatively constant.

I'd MUCH rather just have a $1500 discount on the car, and take my chances with gas prices. Some are predicting gas prices will go up, but others are predicting they'll go down by next year.

Originally Posted by zerostar 

I think we are past the massive decline in SUV Sales, they are WAY off this past year and are getting worse every day. Some dealers won't even take anything larger than an expedition back on trade now.

Sales fell 32% this year, that is MASSIVE for the auto industry.

Mish's Global Economic Trend Analysis: Death of the SUV

I don't think we're past the decline, but we are past the beginning of the decline.

P.S. As an aside: My gas-guzzler owning friends in the last couple of years have been increasingly complaining about gas prices for obvious reasons. They complain to me, and then I always just respond to them... "Why don't you just buy a car that's better on gas?" And I would get blank stares from them. I am constantly surprised by people owning say a 5L 2-door sports car and complaining about gas prices. Or say the BMW X5 owner complaining about gas prices.