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Chrysler extends gasoline subsidy until July 7

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Chrysler extends gasoline subsidy until July 7
May 19, 2008 2:50 PM ET
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DETROIT (AP) - Chrysler is extending for another month its offer to subsidize customers' gasoline prices for three years.

The deal caps gas at $2.99 per gallon with Chrysler paying the rest. It was to expire June 2, but now will go through July 7.

Chrysler said Monday the deal has resonated with consumers and raised traffic on the Chrysler Web site by 25 percent since it began May 7.

"Boy have we gotten a great response," Vice Chairman and President Jim Press said on a conference call with reporters. "This has really resonated with the needs and the worries and concerns that customers have."

Press said 4 to 5 percent of customers are taking the gas subsidy over the other offers.

The offer from the Auburn Hills-based maker of Chrysler, Dodge and Jeep vehicles includes most models. It is based on 12,000 miles of driving per year and the vehicle's government fuel economy rating.

People who buy or lease eligible vehicles can pick between the gas subsidy, cash rebates or zero percent financing. On some vehicles, customers can get rebates and the gas subsidy.

The highest take rate has been on the company's smaller, more fuel-efficient vehicles, he said.

Chrysler would not say how much it expects the offers to cost the company, but did say it has purchased hedging instruments to guard against the price of gas going up even further.

Customers will get a card for buying gas that is linked to their own charge account, Chrysler said. The customer will be billed $2.99 a gallon, and Chrysler will pay the rest.

Actual savings depends on what happens to gas prices during the next three years, but based on the average price of $3.79 a gallon nationwide on Monday, someone buying a 2008 Dodge Durango four-wheel-drive sport utility vehicle with a 5.7-liter V-8 engine would save about $534 per year.

The Durango is one of Chrysler's least fuel-efficient vehicles, getting 13 miles per gallon in the city and 18 on the highway, according to the U.S. Environmental Protection Agency. The savings calculation is based on its highway mileage.

Not included in the subsidy deal are Chrysler's high-performance vehicles such as the Dodge Viper, Dodge Challenger, Chrysler Crossfire and the SRT lineup. Also excluded are the Dodge Sprinter, Dodge Ram Chassis Cab and Jeep Wrangler.

Japanese automaker Suzuki Motor Corp. has made a similar offer in the U.S., with free gas for the summer through June 30.

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