Hyundai Offers a $1.49 Price Lock on Gas

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Consumers have to buy or lease a new Hyundai by Aug. 31 to take advantage of the discount gas offer. Perry says Hyundai is also running advertising reminding new-vehicle buyers of the Hyundai models that qualify for the Federal government's Cash for Clunkers program, which gives consumers up to $4,500 for trading in old vehicles that get below 18 mpg for new, more fuel-efficient vehicles. "We already are marketing our vehicles that qualify on our Web site, and we will add it to our ads as the government program rolls out."

Hyundai is already benefiting from a bump in attention since it topped Toyota (TM) last week in J.D. Power & Associates Initial Quality Study, which measures problems in the first three months of owning a new vehicle, as reported by buyers. Hyundai was the top-ranked non-luxury brand in the annual study.

the fine print may limit takers

The Korean automaker is not the first to offer discounted gas. Last summer both GM and Chrysler offered big discounts on gas when prices were more than $4 a gallon nationally. Buyers who had to choose between the gas discount and other deals typically opted for the cash or cheap financing rather than discounted gas. And they were smart to do so, because gas prices subsequently plummeted below Chrysler's $2.99 per gallon three-year price lock. Of course, if gas climbs back to $3.50 per gallon in the next 12 months, those buyers will be able to cash in again.

Here is how Hyundai's program will work: After buying a new Hyundai, the buyer registers a Visa, MasterCard, American Express, or Discover credit card, or a Visa or MasterCard check card, at hyundai.pricelock.com. After enrolling, the consumer gets a new Hyundai Assurance branded card to be used for all future fill-ups. The consumer is billed $1.49 per gallon of regular grade gasoline, regardless of the price at the pump, and Hyundai pays the difference. (The driver may elect to purchase mid-grade gasoline for $1.64 per gallon or premium gas for $1.79 per gallon as well, though all eligible Hyundai vehicles are factory-certified for regular fuel.)

The card can be used at any gas station in the Voyager credit -card network, which covers 93% of gas stations nationwide, including brands such as Exxon (XOM), Chevron (CVX), BP (BP), Shell, Texaco, and many more. Consumers are eligible for a maximum number of gallons, equal to 12,000 miles divided by the EPA combined fuel economy rating for the qualifying model.

Hyundai says buyers who opt for the gas discount have to subtract $1,000 from any rebate offered on its individual models. That may mean many buyers will pass on the gas discount. Why? The Elantra Touring model, for example, has a $1,500 rebate now. If gas prices average $3 per gallon in the next 12 months, the savings to a buyer would be about $720, based on the vehicle's 26 mpg rating. So buyers would be better off talking the full rebate unless they fear gas prices will again climb above $4 a gallon.

Read more about Pricelock's role in the Hyundai deal.

With Rebecca Reisner in New York and Moon Ihlwan in Seoul.
Kiley is a senior correspondent in BusinessWeek's Detroit bureau.

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