General Motors, the moribund American auto maker that’s been bleeding money (and slashing jobs) for several years, has a new sales promotion for California residents, who endure some of the highest gasoline prices in the nation. The company, which makes brands like Chevrolet, Pontiac, Buick, and Hummer, is offering a special deal: Buy or lease selected GM models and pay only $1.99 a gallon for a year. With fuel prices hovering near $3.50 a gallon in my Los Angeles neighborhood, the company is giving what amounts to a buck-fifty per gallon back to loyal customers.
Depending on the model of car one drives (and how often one drives it) the savings can be negligible or substantial. Those who tool around town in a boat-like Tahoe at a clip of 15,000 miles per year — the average usage for most commuters — will save nearly $1,700 in the rebate year. Those who drive in the less luscious (and more fuel-efficient) Impala will save closer to $1,000.
According to GM’s Web site, the formula to calculate the actual savings is: Monthly Miles Driven / EPA City MPG x (State Average Price for Premium Gasoline -$1.99) = Monthly Credit returned to consumer. In real terms, GM is subsidizing the cost of gasoline for one year, paying around 60% of the retail cost.
If drivers are serious about saving money on fuel, I propose an even better deal: Buy a car that uses less gasoline. Instead of spending 40% less on petrol for one year, how about getting 50% more mileage for five years? In the first calendar year of ownership, a car that travels 30 miles per gallon instead of 20 will realize a slightly better cash savings than the GM promotion, and in the subsequent four (or six or 11) years the savings will be enormous.
One could reasonably ask why GM doesn’t simply make vehicles that get better mileage instead of offering rebates on the gluttonous amount of gas they burn. Perhaps it’s because most Americans, addicted to power and size, are more comfortable whining about the rising cost of operating their pet behemoths than making the change to a more sensible vehicle. Is it really such a terrible hardship to drive a car that gets 30 — or 40, or more — miles per gallon?
If GM’s latest marketing scheme is any indication, we’d rather burn less money than burn less gas.