Chrysler Clings to the Past

Posted by: David Welch on May 6, 2008

I’ll concede that Chrysler has hit on a smart marketing move with its “Let’s Refuel America Program.” As Jim Henry details in this blog, Chrysler will give buyers of nearly all of its vehicles a gas card limiting their payout at the pump to $2.99 a gallon for three years. It’s a pretty savvy move considering that about three-quarters of Chrysler’s sales come from pickups, suvs or minivans. With the exception of the vans, most of the company’s offerings are gas guzzlers. This might just work.

But boy are they trying to keep a grip on the past. Gasoline under $3 a gallon is so 2004. The bottom line is that Chrysler has to do this because the company’s product line is stuck in the ’90s. Big suvs, pickups and jeeps are increasingly irrelevant to middle class consumers who find $3.61 a gallon a burden if they can’t get at least 25 mpg. Even Chrysler’s thrifty options, like the Dodge Caliber compact, simply do not stack up with the competition is selling first-rate small cars like the Honda Civic or Toyota Corolla. Will many shoppers really buy a Sebring over a Toyota Camry, Honda Accord, Nissan Altima or Chevy Malibu? I’ll save you the research. They aren’t. Yes, it’s a good marketing move. But it’s necessitated because Cerberus bought a company with a product line that is mostly out of date.

Reader Comments

jacensolo

May 6, 2008 4:33 PM

i agree that the cars are to big. but the gascard is a good idea and all car companies should try this out.

jt

May 6, 2008 5:00 PM

Will that $2.99 apply to RAM Diesels? If it does I am ready to sign up.

antonio311

May 6, 2008 5:03 PM

Considering the New Dodge Journey crossover has the best in class gas mileage, and also has a 5 star front and side crash test rating, I'll dare to say Chrysler does have VERY competitive vehicles! Also No other company has a Lifetime Vehicle Power-train warranty! You can't go wrong with a Chrysler, Dodge, Or Jeep Vehicle!

In Colorado

May 6, 2008 5:32 PM

If gas prices rise significantlt this move could potentially bankrupt Chrysler. Chrysler is taking a big gamble here. But I suppose that its the only way they can survive in the short term. If gas prices double, they can always say that they wouldn't have survived anyway. Of course if they go under or even just file for bankruptcy those subsidy cards will be worthless. Something to consider before shelling out for that gas hog.

Brian Miller

May 6, 2008 5:35 PM

I'm one of those dumb consumers who cross-shopped the Sebring, Accord, Camry, and other cars and bought the Sebring because of its mileage, quality, fuel economy and much lower price.

If more people come into Chrysler showrooms and cross-shop, they'll likely be pleasantly surprised as well.

I know that's an unpopular notion in the "Detroit stinks, the other automakers can do no wrong" school of thought that's so popular, but many of us cannot afford (or don't want to pay) an extra $6,000 for a Toyota or Honda that offers nothing extra other than a different nameplate.

Rick033050

May 6, 2008 8:00 PM

Hmm, Chrysler must think the run up in oil futures is a bubble getting close to popping. How smart will a consumer feel after making her worst deal on that gas guzzling Cherokee only to see gas prices settle to 298.9. Time will tell.

charris911

May 6, 2008 8:22 PM

I agree with Antonio, Chrysler/Dodge/Jeep makes great products. My 2007 Sebring averages over 30mpg, and my 05 Pacifica gets decent mpg on the highway. My parents have a 98 Dodge Caravan with 108,000 miles strong and a 01 Intrepid with 110,000 miles and still going. They have great style, good vehicles.

Tom at GM

May 6, 2008 8:55 PM

GM did try this two years ago in Florida and California. It didn't work very well.

MK

May 6, 2008 9:26 PM

Jt, yes the program applies to Diesel at $2.99!

Mk

May 7, 2008 11:27 AM

JT:

It DOES apply to Ram diesels!

Not Biased Like Writer.com

May 7, 2008 11:54 AM

Antonio, very well respected comment, obviously the person that wrote this is not a fan of Chrysler that's fine. But has the writer compared any of the said vehicles to a Sebring or Avenger on mileage? I doubt it, or they would see they are better in some instances.

JT, yes it applies to Ram Diesels.

Lane103

May 7, 2008 12:08 PM

What gets me is how they did not think this day would come. Most of these executives should have seen higher gas prices coming, since they probably assisted Mr Bush in his bid for the White House. Chrysler products consistently the worst reviewed for reliability.

David Welch

May 7, 2008 12:19 PM

David Welch here. I am BusinessWeek's Detroit bureau chief and author of the item in question. I must address a few comments. Some readers say that the Chrysler cars get better fuel economy. According to what source? I went to www.fueleconomy.gov and compared family cars. The Chrysler Sebring and Dodge Avenger rank behind all of the cars I named, not to mention the Saturn Aura, Kia Optima and Hyundai Sonata. I compared four-cylinder cars with automatic transmissions.

When I say they're not competitive with some other cars in the segment, I'm looking at quality rankings, residual values and reviews from some of the top driving critics. Chrysler's passenger cars offer few, if any, advantages over competing models. The company's own engineers and executives have already identified hundreds of changes they need to make to their current cars. They readily admit it.

Mitch

May 7, 2008 2:54 PM

Sorry to pile on but....With the new management team in place I think this company is going to do well. I think they are just now getting their feet planted and are coming up with great ideas like this. Will it work, maybe, hopefully, but you have to admit the story has legs!

The anti-Detroit bias is so obvious by the media that is also "stuck in the 90's". So expand your your research above government web sites (you really trust them!? geez I'm shocked you admit that as a primary source!) and go talk to the men and women in Detroit that actually design and build these vehicles for this market.

Mike Drabik, Toledo, Ohio

May 7, 2008 3:07 PM

This plan is all hogwash. It won't work and those who are sucker enough buy anymore SUV's from any of the Big 3 will find themselves with automotive white elephants or very large decorative planters for their lush suburban front lawns.

Here are two solutions at these websites to take the punch out of the pain at the pump:

http://www.vespausa.com/index.cfm

and

http://www.theaircar.com/acf/

Deal with reality before reality deals with you!

Nick

May 7, 2008 3:17 PM

Looks and function are really what I buy cars for. I loved Chrysler's more rounded cars, 02-06 RAM, Chrysler 300M/LHS. Now it's all flat surfaces inside and out. Why? Flat surfaces comunicate cheapness and poor quality, so why do they keep plastering their products inside and out with it?

Steve

May 7, 2008 4:13 PM

REsidual values are not accurate depictions of retained value. Consumer reports bases those assesments on MSRP. Chrysler always has a rebate of some sort on EVERY vehicle (except Wrangler and High dollar sports cars) so if that is taken into consideration Chrysler is right in line. Also the midsize car market is only one segment and not a fair snapshot of a company.

David Welch

May 8, 2008 11:07 AM

Author David Welch here again. One reader posted that government fuel economy ratings aren't trustworthy. Well, those tests are done with participation from the companies and the numbers are posted on the window sticker. They are legit.

and003

May 10, 2008 10:59 PM

That's true, Antonio311 and Charris911. With the Journey, they're off to a great start. Now all that remains is to get customers to understand that.

Marrisa

May 12, 2008 9:54 AM

I Love this Car!!!

MIke Drabik, Toledo, Ohio

May 11, 2009 2:39 PM

I just came back here just over a year since I wrote my original comment. Well Chrysler's is bankrupt. So, Steve, do you still love the nice round cars Chrysler built? Geez ,it sounds more like you're describing a woman and not a car.

And oh yeah, GM, as we all know, is about to go bankrupt in just weeks.

Watch for at least one of them to go belly-up later on this year.

Watcha gonna now buy, Steve?

Mark my words: the car culture's gonna die and it looks looks like it's going to long-hard-and-expensive. It's time to stop bailing out the car-go-round and start using smaller, much cheaper personal transport or public transit.

Do ya have to wait until there's no choice. God, I hope not!

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