GM's gas price jitters
Posted by: David Welch on May 24, 2006
It looks like high fuel prices are making the marketing heads at General Motors a little nervous these days. The company won’t have gas-sipping hybrid-electric drive under the hood of its large suvs until late next year, so the carmaker is offering another way for its customers to save a few bucks at the pump. Anyone who buys one of GM’s mid-sized cars or large suvs—like a Chevrolet Tahoe, GMC Yukon or Cadillac Escalade—can get a pre-paid gasoline card that caps the prices consumers in Florida and California pay at $1.99 a gallon. Gasoline in both states is averaging well over $3 a gallon. Buyers using the card will get a credit every month.
The move makes some sense. If GM needs incentive to keep buyers interested in its big utes during a time of high gasoline prices, this is better than just slapping some cash on the hood. GM says suv buyers who drive 1,000 miles a month can save $60 a month in Florida and more than $100 in the Golden State. The card is good for one year.
I’ll tip my hat to GM for thinking of ways to assuage the frayed nerves of car buyers who are increasingly worried about gas prices. But I have to wonder how long spiffs like this can last. GM’s new suvs, which are best-in-class, have sold quite well. But sales of other big utes have been battered by the spike in fuel prices. In the long run, it will be tough for any car company to keep pushing middle class consumers to lay out $35,000 or so for a gas guzzler with prices near $3 a gallon. GM’s hybrid system could make a difference when it hits showrooms in large suvs late next year. But expensive gasoline and fashion trends are pointing consumers toward other vehicles. Since big trucks still pay the bills at GM, the company is doing all it can to keep the gravy train rolling.
