$3 Gas!

Chrysler has a new marketing deal Buy one of their cars and get guarantee of $3 gas for three years.

A lot of people are excited about this. At least, a lot of economists. They read about consumer angst regarding higher oil prices and they think, “Wow! Another way that the car companies are fooling those ignorant consumers.”

You see, the gas price doesn’t affect the average household budget all that much. If someone drives 15,000 miles per year, they may use 600 to 700 gallons of gas. So a $1 increase in gas will cost them–$600 to $700.

The prospect of the car company pitching for half of that gets marketers excited, because they think the hype will sell cars without costing the company much. But my guess is that the consumer isn’t so easily fooled. Hummers and big pickups are a testimony to consumer rationality. The $3 gas off may well go the way of free toasters at the dealership.

Douglas R. Tengdin, CFA
Chief Investment Officer
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By |2014-09-03T18:50:13-04:00May 16th, 2008|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. - Leave a comment if you have any questions—I read them all! - And Follow me on Twitter @GlobalMarketUpd

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