INDEX - ENERGY ID# 09614-11


Desperate GM loses it's mind

24 May 2006 - 9:00am

GM to give fuel cost subsidy to $50,000 Yukon XL Denali, one of the world's biggest gas guzzlers

GM incentive: A gas price cap
California, Florida buyers to pay $1.99
by Rick Popely on 24 May 2006 in the Chicago Trubune

General Motors Corporation is doing what politicians wish they could do: Lower the price of gas to $1.99 a gallon.

GM on Tuesday announced a promotion that caps gas at $1.99 a gallon for one year for buyers of certain full-size sport-utility vehicles and midsize cars in California and Florida.

Consumers will receive a monthly credit to a pre-paid fuel card for the difference between $1.99 and the average price of premium gas in their state.
The amount they receive will be based on the number of miles they drive, as recorded in the OnStar communications system in all vehicles, and the EPA city fuel-economy estimate for their vehicle.

Eligible vehicles in California include the 2006 and 2007 Chevrolet Tahoe and Suburban, and GMC Yukon and Yukon XL large SUVs. In Florida, Chevrolet Impala and Monte Carlo, Pontiac Grand Prix and Buick LaCrosse midsize cars are eligible.

There is no mileage limit on the promotion, offered on vehicles bought from Thursday through July 5. It covers the first 12 months of ownership, the same period owners receive free OnStar service.

"Consumers are uncertain about gas prices, and this gives them some certainty about what they're going to pay," said GM's market analyst, Paul Ballew.
A Californian who drives a 2007 Tahoe 1,000 miles a month, for example, would receive a monthly credit of about $104, based on the current premium gas price of $3.65 a gallon there. Premium is at $3.19 in Florida, which would generate a monthly credit of about $60 for 1,000 miles of driving a LaCrosse.

Dan Becker, director of global warming and energy programs for the Sierra Club, blasted GM's promotion for supporting America's reliance on foreign oil.
"I have never heard of an addict getting off their addiction by having someone subsidize their fix," Becker said.

Ballew said California was chosen as one of the biggest markets for large SUVs and Florida as a major market for midsize cars. They also are the two largest states for new-vehicle purchases, Ballew added, and account for nearly 20 percent of national sales.

The gas promotion is the latest example of how GM is shifting from national rebates and interest-rate offers to regional, targeted incentives.

On May 2, GM offered buyers in the Chicago, Rockford and Minneapolis-St. Paul areas $1,000 of free fuel on vehicles that burn E85, a blend of gasoline and ethanol. The promotion runs through July 31.

Ford Motor Company and Chrysler Group have not matched the E85 offer. Both indicated Tuesday they would not respond to GM's latest promotion either.
"Our feeling is that customers can see through gimmicky things like that," Chrysler spokesman Kevin McCormick said. Chrysler is offering zero-percent financing for 60 months on several models, and McCormick said that was "a clean, clear message they can understand."

see also:
Island Breath: GM E85 & Ethanol