The Marketing Executive Center

Mediapost recently ran an article on the Gas Promotion from Chrysler http://publications.mediapost.com/index.cfm?fuseaction=Articles.showArticle&art_aid=82909 FYI – you need to login or create an account.

Does this work? Well according to the article, Chrysler is extending the promotion.

The Promo details: “Chrysler launched the effort to get consumers to buy cars despite gas prices by dangling cards locking in $2.99-per-gallon gasoline for three years or 36,000 miles. The program enables buyers of Chrysler, Dodge or Jeep vehicles to apply for a “Let’s Refuel America” card that they can use at participating gas stations. Instead of paying the pump price, the consumer is billed $2.99 a gallon for either regular gas, E85 or diesel fuel. Chrysler pays the difference. ”

The effect: Website hits up 25% over previous week, web leads up 34%.  So effective yes. And gas prices since the begining of the campaign are up 20 cents. With no end in sight to rising gas prices this could be a home run for Chrysler.

Let’s breakdown the ROI:

Promo cost per car: 36000  miles / 15 miles to the gallon = 2400 gallons.

Difference in gas cost avg: $1.00 = $2,400 dollars total over 3 years, or $800 per year.

Less that the current Cash back offer of $3,000, if the consumer uses the card and keeps the car for 3 years.

Now the Leads and Revenue impact:

– If the leads are up 34%.. and lets say graciously that 1% convert into car sales = .34% increase in sales due to the promotion. – Provided all costs are still flat. Chrysler has actually amortized their cashback promo (in the form of a gas card) over 3 years, and not paid in one.  Less than 2/3rds of the cash back ($1600) can be applied to the bottom line revenue for the year. – This does not take into consideration that gift cards have a low redemption rate, however you can expect a better redemption as this is directly tied to consumer fears, emotions and pockets.

 Again -some of these assumptions are generous.  But $1600 per car addition to the bottom line on new car sales plus an increase in sales will add to the year on year revenue for Chysler. 

Definitely a promotion worth watching through the summer.