US, European Automakers Incentivize Sales Via Free Fuel

08 May 2008

LONDON: The battle to boost sluggish sales of new cars took a sharp promotional turn this week as both Fiat (in the UK) and Chrysler on the opposite side of the Atlantic offered cut-price gasoline deals to buyers.

In Britain Fiat is enticing buyers of its Grande Punto supermini with a payment-free period of nine months plus fuel to the value of £1,000 ($1975; €1270).

While on Wednesday Chrysler launched its Let's Refuel America promo campaign, promising a below-pump price of $2.99 per gallon for buyers of eligible Jeep, Dodge and Chrysler vehicles. The deal holds good for three years via a 'gas card' linked to customers' charge accounts.

The promo follows consultation with the automaker's newly formed customer advisory board, 76% of whom declared themselves "very concerned" or "extremely concerned" about fuel prices.

Chrysler says its simple and unambiguous offer aims at "breaking through the clutter" of competing auto offers - and it may well have succeeded, according to Tom Libby, senior director of industry analysis at auto consultancy JD Power and Associates.

"It's pretty rare,” says Libby. "It's a way of standing out and addressing an issue that is seen as slowing new vehicle sales."

US and European manufacturers are not alone in their slashfest, with Honda and Toyota also falling prey to Freddie Kruger-like tendencies. The former upped its average cash incentives during April by 17% from $1,231 to $1,439; the latter by just 3.6%.

Even the magisterial BMW is not immune to the car sales slump in Europe. The firm, which offers some of the sector's most generous leasing deals, "has been over-using its captive finance, at least for current credit conditions," in the opinion of Citibank analyst John Lawson.

Data sourced from Financial Times; additional content by WARC staff