GM offers gas-price cap for SUV buyers Wednesday, May 24, 2006 (Associated Press) By
DEE-ANN DURBIN
DETROIT (AP)
- Aiming to capitalize on consumer angst about the high
cost of gasoline, General Motors Corp. on Tuesday said it
would cap pump prices at $1.99 for customers in California
and Florida who buy certain vehicles by July 5.
One hitch to the promotion is that
customers must also agree to enroll in the OnStar vehicle
diagnostic service, which is free for the first year but
after that will cost $16.95 a month. The other is that
many of the eligible vehicles are serious gas guzzlers.
The offer is good for 2006 and 2007
model year vehicles. In California, eligible vehicles are
the Chevrolet Tahoe and Suburban sport utility vehicles
and Impala and Monte Carlo sedans; the GMC Yukon and Yukon
XL SUVs; the Hummer H2 and H3 SUVs; the Cadillac SRX SUV;
and the Pontiac Grand Prix and Buick LaCrosse sedans.
In Florida, eligible vehicles are the
Impala, Monte Carlo, Grand Prix and LaCrosse. Customers must
buy or lease an eligible vehicle between May 25 and July 5 and
enroll in the OnStar diagnostic service, which automatically
runs checks on the vehicle and sends e-mail notices to owners
each month.
Each month for one year, GM will give
drivers a credit on a prepaid card based on their estimated
fuel usage. Fuel usage will be calculated by the miles they
drive, as recorded by OnStar, and the vehicle's fuel economy
rating.
GM will credit drivers the difference
between the average price per gallon in their state and the
$1.99 cap. The credits can be used through December 2007.
Consumers wouldn't get any credits if gas prices fall below
$1.99.
GM said a California resident who buys a 2007
Chevrolet Tahoe and drives 1,000 miles per month would get an
estimated $103.75 monthly credit, based on the current average
premium fuel price of $3.65 per gallon, GM said. A Florida
resident who drives a 2006 Buick LaCrosse about 1,000 miles
per month would get an estimated monthly credit of $60 based
on the current premium fuel price of $3.19.
GM spokeswoman Deborah Silverman
said GM picked California and Florida in part because the
company wants to increase sales in those states. Silverman
said GM will see how successful the program is before deciding
whether to expand it to other states.
GM's newly redesigned full-size SUVs like
the Tahoe have been big sellers this spring despite rising gas
prices. In the first four months of this year, Tahoe sales
were up 36 percent. The rebate could help older,
slower-selling SUVs like the Hummer H2, which saw sales fall
19 percent in the same period.
GM's car sales were down 12 percent through
April. While some cars have bucked that trend - Pontiac Grand
Prix sales were up 24 percent - the rebate could help
stragglers like the Buick LaCrosse, which saw sales fall 21
percent.
After years of watching customers focus on
their deals instead of their vehicles, GM has been cutting
back on incentive spending in favor of lower overall pricing.
In April, the company lowered per-vehicle incentives by 26
percent to $2,836, the biggest drop of any U.S. automaker.
Silverman said the new program isn't
straying from GM's strategy. The automaker has always said it
would continue to use targeted incentives to focus on
particular vehicles or regions, she said.
GM shares rose 4 cents to close at $24.48 on
the New York Stock Exchange.
