GM to subsidize gas guzzlers

Bob Moon May 24, 2006

KAI RYSSDAL: Shares of General Motors rose more than 9 percent today. Analysts at Merrill Lynch apparently think the carmaker’s a pretty good bet. GM’s doing what it can to turn itself around. Recall last year’s “employee discount for everyone.” That proved to be one of the industry’s most popular consumer incentives. Now, GM has a new idea. It’s aimed at moving its bigger gas guzzlers off the lots. Some buyers in California and Florida will get rebates on their gas purchases. They’ll essentially be paying $1.99 a gallon. Good idea? Marketplace’s Bob Moon reports. You decide.

BOB MOON: The promotion runs through July 5th in California and Florida, states where GM wants to boost sales. Eligible models range from the giant Hummer to the GMC Yukon Chevy Tahoe SUVs, and midsize Chevy Impalas and the Pontiac Grand Prix.

Analyst Alex Rosten of the automotive Web site says GM is directly addressing its biggest sales hurdle right now. But the irony is, the plan might just encourage those who burn the most gas.

ALEX ROSTEN: The way it works is that it covers gas expenses only for that first year. So if you’re only planning to drive 8,000 or 10,000 miles, you won’t reap the same benefits as if you’re driving 25,000.

And the Sierra Club’s Dan Becker says would-be buyers would be wise to think beyond the sales incentive:

DAN BECKER: After the first year, you’re on your own, sucker. You’re stuck with the gas costs.

Becker argues that encouraging gas consumption is irresponsible:

BECKER: The president is right, that America is addicted to oil. I’ve never heard of an addict giving up their addiction by getting someone else to subsidize their fix.

The automaker defends its program. GM’s Deborah Silverman says the company doesn’t get enough credit for topping many categories in miles per gallon:

DEBORAH SILVERMAN: Consumers don’t realize that. So this program, we’re hoping, will help inform consumers about the fact that General Motors, in many cases, does lead in terms of vehicle fuel economy — and also have a chance to get them into one of our great new vehicles.

Silverman says the automaker will see how successful the “gas cap” program is before deciding if it’ll be expanded elsewhere.

In New York, I’m Bob Moon for Marketplace.

There’s a lot happening in the world.  Through it all, Marketplace is here for you. 

You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible. 

Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.