Central Michigan University

• Experts offer insight on Chrysler's gas incentive program

Topics in this story: Business, finance, jobs and the economy, College of Business Administration, Economics, Marketing and Hospitality Services Administration, News tips and sources

In an effort to boost sales, Chrysler announced an incentive to cap the price of gas at $2.99 a gallon for the next three years for consumers who buy or lease vehicles through June 2. The following Central Michigan University experts are available to comment on the possible success of the program based on consumer behavior, as well as how it might affect gas consumption.

SOURCE:
Richard Divine, professor and chair
Marketing and hospitality services administration
Central Michigan University
Phone: 989-774-7403
E-mail: divin1rl@cmich.edu

A few of Divine's initial thoughts on the subject:

• "This program effectively deals with the great fear that many consumers have that gas prices will continue to increase at the same rate in the near future. Buying a Jeep, of all vehicles, may seem like an irrational response to this concern, but risk-averse consumers are attracted to guarantees that can protect them from the consequences of outcomes that they fear the most."
• "The program has probably already paid for itself just from the amount of attention it has received from the mainstream media."

Divine's primary areas of teaching are in buyer behavior, marketing analysis and promotional strategy, and his research interests include consumer behavior, marketing education and research, and new product development.

SOURCE:
Philip Thompson, associate professor of economics
Central Michigan University
Phone: 989-774-3608
E-mail: thomp1p@cmich.edu

A few of Thompson's initial thoughts on the subject:

• "Chrysler's market research showed that '76 percent of consumers surveyed say they are very concerned or extremely concerned about fuel prices,' and its recently announced gasoline cost incentive is really just a rebate dressed up to appeal to this unease over gasoline prices. The lower the vehicle's gas mileage, the higher the rebate would be, potentially exceeding $3,000 over three years for cars with the lowest fuel efficiencies."
• "The extent to which Chrysler's sales will be increased remains to be seen. Another question is how limiting the price a consumer pays for gasoline will affect gasoline consumption. Since consumers can use the money saved to buy anything, not just gasoline, the impact on gasoline usage is likely to be small, tending to, if anything, increase gasoline usage."

Thompson is an authority on energy and regulatory economics. His research has been in the areas of residential energy efficiency, residential demand for natural gas, and oil and gasoline price fluctuations. He also can speak about microeconomics, industrial organization and energy economics.

CMU Media Relations contact:
Heather Smith
989-774-1702
heather.smith@cmich.edu