Compare A Hybrid To Chrysler’s $2.99 Gas Deal

The Let’s Refuel America promotion from Chrysler is getting a lot of press right now, and for some reason the more I hear about it (and the more I pay at the pump) the better it sounds.  At the same time, many people who are in the market for a new car are doing comparison searches to see which would be better - buying a vehicle that qualifies for the $2.99 gas guarantee, or buying a hybrid car?

Without going into all the specific details, the Chrysler $2.99 gas guarantee promotion (running from 05/07/08 to 07/07/08, and likely to be extended) works like this…

First, you purchase one of the following “eligible vehicles” during the two month promotion:

Chrysler 300, Chrysler 300C, Chrysler Aspen, Chrysler Pacifica, Chrysler PT Cruiser, Chrysler PT Convertible, Chrysler Sebring Sedan, Chrysler Sebring Convertible, Chrysler Town & Country, Dodge Avenger, Dodge Caliber, Dodge Charger, Dodge Charger RT, Dodge Grand Caravan, Dodge Journey, Dodge Magnum, Dodge Magnum RT, Dodge Dakota Club Cab, Dodge Dakota Quad Cab, Dodge Durango, Dodge Nitro, Dodge Ram 1500 Pickup, Dodge Ram 2500/3500 Pickup, Jeep Commander, Jeep Compass, Jeep Grand Cherokee, Jeep Liberty, and Jeep Patriot.

Then, you can drive your new vehicle up to 12,000 miles per year, for 3 full years, and the cost of your gas is guaranteed not to exceed $2.99 per gallon.  According to Chrysler, the gallon allotment calculation used to determine three years of gas at $2.99 per gallon is as follows: 12,000 miles driven per year multiplied by 3 years, divided by the vehicle’s adjusted combined EPA City/Highway average miles per gallon.  (You are able to drive more than 12,000 miles per year, but you’re on you own in terms of gas prices for those additional miles.)

Seems like a pretty good deal, wouldn’t you agree?  So, would you be better off buying one of these vehicles and locking in the three year “special incentive gas card deal”, or would it make more sense to purchase a hybrid car like the Prius or Civic?  Part of the answer depends on the price of gas over the next 36 months, which is anyone’s guess.  Even so, let’s pick a number and take a stab at it.

Currently, a gallon of gasoline is averaging about $3.82, down a few cents from it’s all-time record high just a week or two ago.  So, to keep the math simple, let’s assume that gas averages an even $4 per gallon over the next three years.  Of all the cars listed above (we’ll exclude the SUVs, minivans, and trucks), the ones most comparible in size to a Toyota Prius would be the Chrysler Sebring, Dodge Nitro, or the Dodge Caliber.

Let’s say you decide to buy a Dodge Caliber, since it is the most fuel efficient of all the eligible vehicles.  The Caliber’s average EPA is set at 24 mpg for this promotion.  This means that Chryler guarantees you will pay no more than $2.99 per gallon for the first 500 gallons of gas you buy each year, for the next 3 years.  (12,000/24=500).  Since you only have to pay $2.99 per gallon, you would spend about $1,500 per year for gas - or a total of $4,500 during the 3 year promotional event.

Now imagine that you elected to go green, and instead purchased a Toyota Prius.  Again, you drive 12,000 miles per year for the next 3 years, but now you pay an average of $4.00 per gallon for gas.  With an EPA 48 mpg rating, your Prius would use 250 gallons of gas per year (half of what the Caliber used), which amounts to an annual fuel cost of $1000.  Even though you paid $1 more per gallon for gas, after 3 full years, your total fuel expense is $1,500 less than what you would have paid while driving the Dodge under the “Let’s Refuel America”deal.

Obviously there are several other factors which must be factored in to determine which is a better deal.  A new Dodge Caliber can be purchased for under $15,000, although one with similar equipment to a base model Prius ($21,500) would run closer to $20,000.  Then you have to consider the cost of ownership during the 3 year period (the Toyota has the advantage here), as well as the residual value if you plan to sell the car (the Prius is predicted to have a much higher resale value).

While the Chrysler, Dodge, Jeep gas promotion might seem tempting, it pays to crunch the numbers.  Let’s rethink this one America, because it may be more hype than help.  If you’re trying to decide, the hybrid car vs. gas-only calculator might also be of use.