Is this a great time to buy a new Ram? Or not?

Decades ago Chrysler developed a single-word plan to sell cars, and when Joe Garagiola in the 1975 Super Bowl commercial uttered those famous words, “Buy a car, get a check” the rebate was born and forever changed American buying habits.

Chrysler’s latest effort is the $2.99/gallon “Let’s refuel America” campaign. Naturally, limitations abound.  But I can’t find any exclusion of the Ram diesel (or Jeep Grand Cherokee diesel) as they are in the limited lifetime powertrain warranty plan.

In theory, you buy a new Chrysler product, register for a fuel card, and regardless of the price shown on the pump, pay $2.99/gallon for it. This applies for 12,000 miles per year, for three years, at the EPA estimated miles per gallon. What I’ve yet to determine is whether this is EPA average, city, or highway, and how they rate fuel economy for vehicles that don’t get EPA ratings. Like the diesel Ram.

If we use 18 mpg, EPA city for a Grand Cherokee diesel and what one might get on the highway in a lightly-loaded Ram diesel, you burn 667 gallons a year. At today’s price for diesel in my region, $5.099/gallon, that’s $3,400 in fuel per year, or $10,200 over the three years (if the price doesn’t change). At $2.99/gallon, fuel cost is about $2000/year and $5,983 over three years. That’s only $1,500 less than what the diesel engine option adds to purchase price.

At the same time, Chrysler has incentives of $1,500 - $3,500 on 2008 Grand Cherokees (up to $6,500 on 2007s) and $4,500 on the hood of 2008 Ram HDs (up to $7,500 on some 2007 Rams). On a Ram HD diesel that’s a potential savings of ten grand, given assumptions like fuel prices remaining constant and doing 12,000 miles a year at the right economy.

This is the 2008 version of “rebate” and has the same intent:  Move the iron. Chrysler’s small cars are doing OK, but profitable trucks are getting hammered. Where an ideal “days supply” of vehicles is 60, the Grand Cherokee is at 102 days, the Ram 109, Dakota 110, and Jeep Commander 117. April 2008 sales were off 40% from April 2007.

The questions are will it work and at what cost? Immediately, environmental groups called this merely a way for Chrysler to continue to sell gas hogs - even though the efficient things are already selling. Will the costs incurred be more than the value of inventory cleared? Will Americans clamor for even greater discounts?

Time will tell. Just as cell phone plans have another 10% built in as fees and airlines add a-la-carte charges to everything beyond getting through the door, Americans have become enamored with “the deal.” Five years after it came out my old boss now has “his car” because of “the deal.”

Maybe you should just buy a van and run the car pool. Briefcases, backpacks and window seats cost extra, of course.