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The Honolulu Advertiser
Posted on: Friday, November 18, 2005

Chrysler offering 2 years of free gas

By Jeff Green and Alan Ohnsman
Bloomberg News Service

Chrysler's latest bid to lure customers targets most new 2005 and 2006 models, including the Dodge Neon SXT. Along with free gas, buyers get free maintenance for two years and extended warranties.

Associated Press library photo

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DaimlerChrysler AG's Chrysler, which reported a 3.1 percent drop in October U.S. sales, will offer free gasoline and maintenance for two years and extended warranties on most new 2005 and 2006 models to win back buyers.

Customers will get a debit card loaded with $2,400 toward gas purchases, marketing chief George Murphy said in Las Vegas yesterday. The card's value will be equal to the cost of paying $2.15 a gallon to drive a vehicle with the average fuel economy of 21.8 miles per gallon for 12,000 miles a year, Murphy said. The card can be used for non-gas purchases.

"Of all the promotions we've seen from Detroit over the past few years, this is one of the more creative," said Jesse Toprak, who analyzes vehicle pricing and incentives for Edmunds.com, an automotive data service based in Santa Monica, Calif.

Also this week, General Motors Corp. announced a new round of incentives that cut prices as much as $12,000. Yesterday, Ford Motor Co. said it will launch its own new incentive program with steep discounts. The automakers in early October ended offers of employee discounts to all buyers.

Chrysler also will extend its warranty for the engine, transmission and other parts to five years or 60,000 miles from three years, 36,000 miles, Murphy said. The deal doesn't apply to the Chrysler 300, Dodge Charger and Dodge Magnum cars. Buyers can opt instead for rebates ranging from $1,000 to $7,000, Chrysler sales chief Gary Dilts said.

Chrysler is trying to extend its U.S. sales growth into a ninth straight quarter after it gained U.S. market share last year for the first time in five years. The No. 3 U.S. automaker has relied on new models such as the Charger sedan and Jeep Commander sport utility vehicle to post a 6.1 percent increase in the first 10 months of this year.

Chrysler is recovering U.S. sales and market share under products developed by former Chief Executive Dieter Zetsche. He cut 40,000 jobs from 2000 to 2004 to end losses at the unit while developing improved versions of Chrysler, Dodge and Jeep brand models.

Zetsche left Chrysler in September to run the Mercedes-Benz unit and at the end of this year is scheduled to replace retiring DaimlerChrysler Chairman Juergen Schrempp in running the entire company.

Mitsubishi Motors Corp. in September began offering a year's worth of gasoline for all of its 2005 models, and extended the offer to most 2006 cars and trucks as well. Buyers who select the free-gas option receive gasoline credit cards worth between $1,500 and $2,500, based on the model they select.

The program currently runs through the end of November, Wayne Killen, vice president of U.S. marketing for Tokyo-based Mitsubishi said in an interview today.

"We still find that it's kind of a good way of raising interest," Killen said. "Our dealers are definitely saying customers are coming in because of gas prices, and the chief goal of the program is to generate traffic."

Since the offer went into effect, Mitsubishi Motors reported a 1.4 percent sales increase in October, its second monthly gain in the U.S. this year. Before August, Mitsubishi's sales had fallen every month for more than 30 consecutive months.