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Posted by D. Sherman on Tuesday, May 06, 2008 at 12:47:06 :
In Reply to: Chrysler Guarantees fuel @ $2.99 for 3 yrs. posted by MoparNorm on Tuesday, May 06, 2008 at 12:18:32 :
That's pretty clever. They must have some real financial whiz-kids to figure that out. They have to consider the likely price of gas over the next 3 years, the average number of miles driven by the people who take advantage of this program, the availability of capital and interest rates, and crunch all that into a number that reflects what it will cost them to offer this option "in lieu of other available incentives"
I wonder what it's worth to the buyer? Probably only people who expect to drive a lot will take advantage of it, so say they drive 20,000 miles/year. Say the price of gas averages $3.50 this year, $4 next year, and $4.50 the year after, and the car gets 25 mpg. That seems to be a best-case scenario from the buyer's point of view. There's also a fair chance that gas will drop below $3 if we get into a recession, and will stay there for a few years. Anyway, at 25 mpg, that's 800 gal/yr. The savings would be $400 in the first year, $800 in the second year, and $1200 in the third year, for a total of $2400. I wonder what the other "available incentives" that one must give up are worth.
I also wonder how they keep people from sharing their discount card with their friends, using it for their other vehicles, and filling up their jerry cans (with or without burro schlongs) with subsidized gas. If it was GM, they'd probably use on-star to verify that the right car was with the right discount card or something.