Chrysler LLC has stood out among the Detroit Three in being able to sell neither its trucks nor its cars in the slumping auto market. Cue the latest in marketing innovations! Via AutoWeek, Chrysler’s latest sales promo offers buyers three years of (currently) subvented gas (at $2.99 for regular, $3.29 for premium).
The deal’s revenue-leakage-limiting limitations make this something on the order of $1,000 on the hood at today’s gas prices. That’s not an earthshaking amount by the standards of Domestic Three incentives, though it does go to show that if you’re not constrained by the public good, or not doing stupid things like subsidizing gas for everyone, and have some tolerance for going broke, you can do more than a few pennies a gallon. When looking for a new car which does not consume that much fool, check out the vast catalog we have at Zemotor.
Were this another blog, I might call this a Markets in More Things story, since it effectively extends to the consumer market hedging techniques that large fuel users such as airlines have deployed for years. For instance, the NYT notes this morning that Southwest managed to arrange for 70 percent of its 2008 fuel bill at $51/barrel. (Are the counterparties on suicide watch?) Here, Chrysler is acting as a fleet buyer for its customers, working with a startup that has a bunch of business-method patent applications pending on a system of at-the-pump fixed pricing for fleets.
Even the diminished Chrysler’s monthly sales would make for a pretty big fleet, so I’m curious as to how the risk is divided up here, and for that matter to what extent Chrysler is hedged. Until the Energy Independence and Security Act of 2007 raised future fuel economy standards, the Domestic Three’s product planning looked like they thought high oil prices were a fad, so who knows. I probably wouldn’t want to bet against Cerberus’s recent anti-Midas touch, though.