GM Offers Gas-Price Cap for SUV Buyers ($1.99 gal. for a year)

[IChing]

GM Offers Gas-Price Cap for SUV Buyers ($1.99 gal. for a year)



DETROIT May 23, 2006 (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.>>>snip
http://abcnews.go.com/US/wireStory?id=1997090

Any Hummer owners on DU? .............. I know that secret service officers drive them.
http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x2304280

doesn't it sound like they are in bed with oil companies?

[LeftyMom]

1. If I were in the market for a new car

I just might take them up on that. The Impala is a decent family car, safe and gets similar mileage to my Saturn (reports have it at high 20's with mixed city and highway driving in the real world.)

Edit: But it's packaged with OnStar. Nevermind. :scared: Thanks, I really don't need a tracking device in my car. Forgot about that. Oh well, guess GM doesn't want my repeat business (I really want a Toyota Sienna anyhow.)

[midnight armadillo]

25. naw, get an odyssey

The sienna comes with a solid rear axle and you have to pay extra for rear disc brakes. The Ody has more power and gets better mileage (esp. the higher end ones that shut down 1/2 of engine cylinders on the highway), handles and brakes better, has a better safety record, and comes w/ 4-wheel disk brakes.

We love our 2003 Ody that we've owned for 2.5 weeks ;)

[hornblast]

2. a REALLY GOOD IDEA when your company is near-bankrupt

Yes, let's further drive already rampant gasoline consumption by GIVING PEOPLE MONEY when we can't keep our own affairs straight. heck, maybe enough of 'em will buy our biggest and most expensive vehicles and make up for all the cash we're losing while we try to screw our workers! YEAAH!

(rrrrrrrrR)

[Deja Q]

20. GM wants to see what is a dying vehicle. Let them eat rust.

It's all about money.

[Clovis Sangrail]

3. pathetic

hey Exxon... we're gonna keep pumping out these low milage monsters.
but to get people to buy them we need to promise the a gas rebate for a year.

Wanna split it?

[Name removed]

4. Deleted sub-thread

Sub-thread removed by moderator. Click here to review the message board rules.

[NEOBuckeye]

5. GM still doesn't get it.

Why do they continue to insist upon forcing SUVs down Americans' throats? Where is their innovation, their creativity and foresight? Would it be that difficult to invest money in development of fuel-efficient vehicles the way Honda and Toyota have been doing?

No wonder GM is a dinosaur about to become extinct. If they cannot adapt to the changing times, then they will perish. It's only too bad that their demise will put hundreds of thousands out of work, and may wind up being the final nail in the tomb of this economy.

[Telly Savalas]

7. It's totally baffling, isn't it?

The only rational explanation I can think of is that the executive officers of GM have secret off-shore investments where they hold a short position on the company's stock.

[hornblast]

21. Honda, Toyota, and... Volkswagen

Not to be too much a braggart, but my Volkswagen Jetta TDI gets 50 mpg on the highway. And that's with biodiesel -- from which OPEC and Exxon don't get a goddamn dime!

Just out of curiosity, how many hybrid owners get 650 miles per tank of fuel? I do, and that is without a hybrid. Now a diesel-hybrid car... ohhhhhh..... :thumbsup: :thumbsup: :headbang: !!!

[ThoughtCriminal]

6. When they go under and beg for a bailout

they will want the taxpayers to pick up the bill.

[ComerPerro]

11. That's how "free-market capitalists" work

they want no rules, no regulations, and they want to government to stay out of the way of private enterprise...

Until a company goes bust, then its the government's job to bail them out....


Odd how they want to take all of the risk out of their free-market BS for big companies...

[987654321]

8. That's the buy now pay up the ass later deal

Progressive thinking GM!
And of course they are in bed with the oil companies.

[JVS]

9. I wonder how much gas you could pump in and siphon off and sell...

for $2.50 before getting told to stop

[TahitiNut]

10. That's why the On*Star is required. It transmits diagnostics, including

... odometer mileage. While it can be used to track/locate the vehicle, the odometer readings would be more than enough and quite a bit easier. I wouldn't be surprised if it also tracks gasoline consumption. My 1991 Chrysler LeBaron Pervertible has an onboard mileage computer that tells em what my 'instantaneous' mileage and distance-to-empty is at any time. Fifteen years later and I'd guess that technology is far cheaper and more accurate - even though the accuracy of mine is deadnuts on.

[Blue_Tires]

12. and this is the same GM that is fretting about

finding a way to pay their union workers' pensions and health plans?

[NMMNG]

13. Now that's intelligent thinking

We're already dealing with dwindling petroleum reserves, questionable access to what is available, fluctuating prices, global warming and myriad other issues--and the answer these bozos come up with is to specifically push their line of gas guzzlers. :banghead:

[Oeditpus Rex]

14. Maybe I'm just tired and not thinking clearly

but if GM can promise gas at $1.99 per gallon, that obviously means gas can be had for $1.99 per gallon — perhaps even less — if incentive is given.

Like I said, maybe I'm just not thinking clearly, but it seems to me that our wonderful government could create incentives as well as GM, and we wouldn't have to buy a new car or have Big Brother in our dashboards to reap the benefits.

Doesn't leave much doubt as to who's running this store, does it?

[lectrobyte]

17. No, it means that GM is giving you a rebate of roughly $1000 and

betting they can make it up in more On Star sales etc. in addition to moving some product.

[Telly Savalas]

22. Nah. Look at GM's financials.

The one thing they excel at is losing money.

[Sgent]

15. This is smart marketing

anyone in the market for a new suburban is looking at 60K+ -- the gas prices aren't nearly as signficant as the insurance/depreciation/etc over the life of the car.

GM will simply buy future's contracts which will protect them from gas price increases. Future contracts allow GM to put up X amount of dollars for the right to purchase feul at Y price in 1 month, 3 months, 12 months, etc.

The total subsidy to the new car owner from GM (the cost of the future's contract) will be less than if they offered huge rebates -- and likely will be more interesting to the potential consumer.

Note -- I am guessing that the $1.99 above doesn't include any taxes.

[Clovis Sangrail]

16. Suburbans start at $36.9k not $60k

even with all the bells and whisles I couldn't get one over $52k

[lectrobyte]

18. Not sure I understand your point about the futures contracts. GM

is not selling you any gas, they are basically refunding you the difference on a credit card or something.

[Sgent]

19. Yes

but GM hedges the cost of the refund by using future's contracts.

Future's contracts in general have nothing to do with the underlying feul -- no one actually purchases the feul that way.

(easier to follow example follows, actual reality is a little different)
For instance, say I buy the option to buy 100,000Gallons delivered on Sept 30 for $1.99.

On Sept 30, the price of gas is 2.99/gallon.

I sell my contract back to the person who offered it for $100,000 then use that money to buy gas from my local distributor.

If using options, the original cost of that contract may have been merely $2-3K. If using traditional futures, the original cost would have been 10K, and I would have had the 100K deposited in my account during the course of the appreciation of the feul.

[jmowreader]

23. Umm...no

When you buy a futures contract, you are guaranteeing that on a date certain in the future you will pay x amount of money for y amount of commodity. If you're buying a million bushels of wheat at $3.50 per bushel for April delivery, on the second of April a guy is going to show up at your doorstep with a million bushels of wheat and a bill for three and a half million dollars.

When you buy an options contract, you are paying for the privilege of buying, on a date certain in the future, a certain commodity in a certain amount for a certain price. A million bushels for April delivery at $3.60 per bushel. The important part here is that you don't HAVE to buy all of the wheat under the contract, or any of it. If the bottom drops out of the wheat business and it's selling for $2.85 per bushel on date certain, you hang the options contract on the toilet paper roller in the executive washroom and buy the product on the spot market.

Futures make perfect sense for people who actually use the commodity. If I'm General Mills, futures let me know what my cereal will cost to make in the fall. If I'm the guy who runs Rockford Grain Growers, futures let me know how much I'll be making on the wheat I sell General Mills in the fall.

A lot of companies will do both futures and options contracts: they'll buy what they know they'll need on a futures contract, then put enough to bring you to how much they hope they'll need on options contracts.

Good so far?

Futures are also bought by speculators. You can go two ways: long or short. When you go long you expect that the price will go up, so you buy the futures contract, wait until the stuff goes up in price and sell the futures contract to someone else. Going short means you think the price will go down, so you borrow the contract from your broker, sell it, wait for the price to go down, buy the contract back and give it back to the broker. There are different risk profiles involved with the two transactions. If you're long, you can lose your entire initial investment if...oh, say the government outlaws the product you're long on. You'll lose all your money. But that's it. You can't lose any more. If you're short, you have unlimited financial risk because the stuff could go through the roof.

GM's obviously hedging somewhere, but I don't think it's gas.

[Sgent]

24. When was the last

time that you ever heard of a CBOT future being fullfilled?

That's right -- almost never. The companies (and/or speculators) net each other out just before the contract comes due -- using cash rather than the physical commodities. Gasoline futures & options (various grades) are traded on the NY exchanges (and maybe Chicago as well).

They both have a large place in risk management, and it would be easy for GM to know how many gallons per month they will be responsible for reimbursing (over the $1.99 amount) based on the average driver, and make the purchases to hedge their costs.

Those total costs will probably be less than the $2-$3k rebates they otherwise will have to offer, and will provide a more incentive to the consumers. This is what makes it good marketing.