Gas offer not pumping sales

Chrysler expected to sell 18% fewer vehicles despite $2.99 deal

Eric Morath / The Detroit News

Even the lure of $2.99-a-gallon gas for three years didn’t bolster Chrysler LLC’s sagging sales in May, automotive analysts predict.

While Chrysler’s Gas Guarantee promotion — introduced May 5 — has attracted more customers to its showrooms, that interest is not translating into a sales turnaround for the Auburn Hills automaker. Analysts say Chrysler’s lineup is too heavy on trucks and SUVS and void of the hybrids and compact cars consumers are buying to offset $4-a-gallon gas.

Edmunds.com projects that Chrysler’s May sales will be down 18.2 percent compared with the same month a year ago, outpacing an expected industry-wide downturn of 7.4 percent.

Automakers officially release their May sales today and the results are projected to be dismal. Crosstown rival General Motors Corp.’s sales are expected to slip 19.2 percent from the same month a year ago, Edmunds predicts. Ford Motor Co. sales will slide 9.3 percent. Toyota Motor Co. will dip 3.1 percent, while Honda Motor Co. sales should jump 7.2 percent in May.

In a glimmer of positive news, the number of cars and trucks sold by Detroit’s Big Three Automakers and the industry as a whole will rebound slightly from the 1.25 million units sold in April, analysts say.

May, too, could be another record month for hybrid and compact car sales, with truck purchases falling again, said Jessica Caldwell, an analyst at Edmunds. Trucks and SUVs account for 70 percent of Chrysler’s lineup.

"Chrysler for such a long time built its brand image around high performance, high power and Hemi engines, and now things have shifted away from that," she said. Despite the gas incentive, "(Chrysler doesn’t) have product to attract buyers," she added.

Chrysler officials, however, said the gas-price promotion has been successful, increasing showroom and Internet traffic. The automaker has extended the offer until July 7.

Some environmentalists contend the guarantee pushes gas guzzlers, but Chrysler spokesman Stuart Schorr said it makes its fuel-efficient models — like the Dodge Caliber — a better deal.

"Dealers are very bullish on the customer appeal of the $2.99 Gas Guarantee program and have told us they want to continue to focus on our marketing messages in June on the program," he said. "The program continues to be embraced most by our customers of our most fuel-efficient vehicles and in places like New York and California."

Under the deal, buyers of Chrysler models receive a special gas card that limits the amount charged to a customer’s credit card to $2.99 a gallon. The deal is limited to three years and to 12,000 miles driven annually.

For most Chrysler models, buyers can choose between a cash rebate, zero-percent financing or the gas guarantee. Dealers said 10 percent to 25 percent of buyers are opting for the gas.

Some local dealers said the $2.99 Gas Guarantee has helped their May sales numbers.

"I go to the barber shop; I go to the dry cleaners and they all ask me, ‘Is the $2.99 thing for real?’ " said Bob Shuman of Shuman Chrysler Jeep in Walled Lake. "If you don’t talk to them, you can’t sell them a car."

Gas deal halts worse declines

While the gas promotion may not have changed Chrysler’s fortunes, it may have halted even deeper declines in pickup trucks and SUV sales, said Tom Libby, senior director of industry analysis at Power Information Network, a unit of J.D. Power and Associates in Troy.

"The deal will help move some vehicles that are perceived as not fuel efficient, but the overall impact will not be huge," he said.

Libby, however, credits Chrysler for stepping outside the box with the create incentive. "We’ve seen rebates and financing deals forever and they clearly are not getting the consumers attention any more," he said.

Alan Helfman, who owns River Oaks Chrysler Jeep in Houston, said the $2.99 gas deal is bringing in customers but many are confused. One driver pulled into the dealership searching for the $2.99 gas pump.

Chrysler’s rebates have been responsible for more sales at his dealerships than the gas promotion, Helfman said. The cash rebates make it easier for many customers to finance their vehicle.

"The rebates are huge — $2,500 on (Jeep) Patriot and Compass — that’s pretty strong on a little car," he said. "People know gas prices go up and down so they take the money because it’s a sure thing."