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 =97 Pontiac Grand Prix sales were up 24 percent =97 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.