GM, Toyota, Ford won t follow Chrysler with gas subsidies

5/6/2008

DETROIT Ford Motor Co., General Motors Corp. and Toyota Motor Corp. have no plans to match Chrysler LLC s offer to subsidize the cost of gasoline for car and truck buyers, the companies said Tuesday.

The Auburn Hills-based automaker on Monday night announced an offer that caps the price of gasoline at $2.99 a gallon for three years for people who buy or lease new vehicles from Wednesday through June 2. The offer covers most models and is based on 12,000 miles of driving per year and the vehicle s government fuel economy rating.

Customers will get a card for buying gas that is linked to their own charge account, Chrysler said. The customer will be billed $2.99 a gallon, and Chrysler will pay the rest.

Actual savings depend on what happens to gas prices during the next three years, but based on the average price of $3.61 a gallon in Detroit as reported Monday by AAA Michigan, someone buying a 2008 Dodge Durango four-wheel-drive sport utility vehicle with a 5.7-liter V-8 engine would save about $414 per year.

The Durango is one of Chrysler s least fuel-efficient vehicles, getting 13 miles per gallon in the city and 18 on the highway, according to the U.S. Environmental Protection Agency. The savings calculation is based on its highway mileage.

Japanese automaker Suzuki Motor Corp. has made a similar offer in the U.S., with free gas for the summer.

General Motors tried a gas payment promotion two years ago in Florida and California with little impact on sales, company spokesman John McDonald said Tuesday.

GM instead is focusing on making vehicles more fuel efficient because that s what customers are demanding, McDonald said.

It really didn t do much to drive sales, and it really was for consumers more an issue of do vehicles really get good fuel economy or not? he said.

Ford spokesman Jim Cain said the company has tried similar programs regionally but also has decided to focus on more efficient engines and transmissions and other measures.

We know that fuel economy is important to consumers, he said. It ll be important whether gas is $2.99 a gallon or $4.99 a gallon.

But Chrysler is hoping the move will boost sales of its vehicles, which dropped nearly 18 percent from January through April when compared with the same time last year, according to Autodata Corp.

It s a way to give (customers) peace of mind, Steven Landry, executive vice president for North American sales, said in a conference call Monday evening. We want to get everybody through these challenging times.

Chrysler has been hit hard by the market shifting from trucks and sport utility vehicles to more fuel-efficient car-based models. Through the first four months of the year, about 70 percent of its light vehicle sales were trucks.

Chrysler said it s in the middle of investing $3 billion in its engines and transmissions to make them more efficient for the next generation of models.