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GM Capping the Price of Gas. Is this the Beginning of the End?

| Thursday May 25th, 2006 | 3 Comments

gmlogo.jpgAs reported widely (LA Biz Journal, Treehugger), General Motors will offer a one year gasoline credit for buyers of new SUVs and full sized cars in California and Florida. Drivers will only pay a maximum of $1.99 per gallon for one year after the purchase date. This coincides with GM’s claim to be “going green”. Amazing.
From a business perspective, I’m trying to think of how this is good for GM in the long term… Are they trying to dump their worst performing models on an unsuspecting populace? Are drivers really stupid enough to take the bait? It seems like a classic short term view, the kind of thing that will come back to burn GM hard in the long term as people finally start wising up, or more likely, are forced to change to more efficient vehicles when they realize the price of gas isn’t going anywhere.
It’s time to dump the old addage that “What’s good for GM is good for the USA”. The dead opposite is increasingly true.


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  • Daniel

    Boy i hope they know what they’re doing. If GM’s not careful, $3.50 gas will finally, finally, finally, pull them under.

  • dave

    Nobody ever went broke underestimating the intelligene of the American consumer. Of course this will work, and of course it will backfire. It’s the American Way.

  • reden

    i have seen car deals like this here in the Philippines. they offer one year’s amout of fuel and i told myself, surely there is a catch. who would want to subsidize me one year’s amount of juice, right? as it turns out, the fixed cost components of the cars have already been recovered and they are selling at a “loss” just to move units. almost had myself duped there hehe.