After all, it costs only few hundreds more than Civic hybrid, but has triple the cargo capacity.

People could save a ton of money (about $8,000) and get much better mileage with a Fit or xB, if cargo capacity is an issue. The xB also has exceptional head and leg room compared to the Vue.

Joseph Willemssen

Fit or xB has a decent capacity , you made a good point.
However there are people who go for big suv's like explorer's, trailblazer's looking for lot of space, for them Vue is a ideal choice.

BTW, CUV (vehicles with car chassis) sales are set to overtake sales of SUV (vehicles with truck chassis).

These are the ranking for Apr-2006 sales.

Similarly on the car side, hatchbacks / wagons are gaining shares from sedans / coupes.

1.Escape
2.Rav-4
3.Explorer
4.CR-V
5.Tahoe

CUV's have captured 3 places in top-5.

Makes little sense...but GM was up 8% today,,,but Volvo/Ford is coming out with another 5 cylinder turbodiesel(EU following post). Bet every one is sold at or above MSRP...HINT! CLUE?

Max-

You would be surprised at how "useful" all that capacity really is. I remember countless times (working in a warehouse) customers thought their rather large SUV offered them the ability to pack large items in their vehicle but they end up either finding someone with a pickup truck or having the item delivered...with the SUV going home empty (other than the one or two occupants of said SUV). Maybe if you like to buy 2 months worth of groceries in one shot a SUV would be necessary, but I fit almost a months worth of groceries in my little 2 door coupe with 2 kids inside at the same time.

Furniture which fits in a SUV I can usually fit in my car. TVs which fit in a SUV I can fit into my car 25% of the time...the ones that don't fit I wouldn't want to carry into my house by myself anyways and would rather have delivered (try picking up a 32" or 36" sony tube TV). I guess they could haul more people than I but I never see those people when I drive to work since they are usually occupied by only one person.

Patrick

I am not a supporter of SUV's, but at the same time, I dont think sedan/coupe are space efficient.

I have a mid-size sedan and I cannot fit a 25 inch TV box in it.

If I had a CUV or atleast a small wagon / hatchback, the same TV box will fit with or without back seat folded.

Thats the reason, I am supporting this class of vehicles
CUV
Hatch/Wagon
and thats the segment which is fast growing in today's market.

The new models are Fit, Versa, Yaris, Caliber, Edge.

Rafael is right -- the cost of this incentive is likely to be on par with, or less than, other incentives which it will likely replace.

You don't even need to trust his math. The text of the article mentions that the expected monthly rebate on the California Tahoe is around $100, while the Florida LaCrosse is $60. That's $1200 and $720 per year, respectively.

However, I wonder if this will backfire on GM by encouraging system-gaming: People with exceptionally high auto usage -- especially exceptionally high highway driving -- may be attracted to this program disproportionately, forcing the monthly cost to be higher than expected. Since the rebate is based on total miles driven divided over the average city/highway efficiency of the vehicle, people with very large highway useage will be credited for burning more gallons than they actually do (since their average mpg may be higher than the formula one), allowing them to collect rebates on this "phantom gas." After all, this program explicitly comes with no mileage cap. (1)

Rafael may still be right: Most people opting for this program may be swayed by emotional concerns rather than a rational cost-benefit analysis. Moreover, GM may be taking another angle on this as well, which MarkA gets at above.

While the original posting does not make this clear, the first year of OnStar service comes free with the vehicle. (2) Thus, the value of the rebate is not eaten up by the cost of the subscription, like MarkA fears. However, by encouraging people to opt-in to the one year free trial, GM may be hoping to garner more paying OnStar subscribers in the longer-term; try before you buy lead to a lot of try and more buy. As a side note, according to my research, there are two levels of OnStar service -- the basic one costs $17 per month, while the premium one costs $35 per month. (3) More subscribers probably add little marginal cost to running the service -- the fixed costs of renting a satellite, installing automotive receivers, and having a basic support staff are probably the overwhelming costs -- and will probably make the original gas-rebate program even cheaper for GM than its usual cash-back incentives.

SUVs are still relatively pointless, uneconomical and unsafe vehicles in most instances. However, GM's bit of clever marketing is probably not part of some lurking, malevolent scheme. It's just a way for a struggling automaker to get a little mileage out of a faltering domestic lineup, buying time to bring to market sensible cars that people will want. GM's overseas departments do a brisk business selling such cars, and they are likely in the midst of an attempt to translate that into American sales.

NOTES:
(1) http://www.fuelprotection.com/gmpromo/fuelcntrl.promo?brandId=oo&zip=33140
(2) http://www.chicagotribune.com/business/chi-0605240227may24,1,5572555.story?coll=chi-business-hed
(3) www.onstar.com

I use to think Toyota would eventually by GM. Now I think it makes more business
sense for Exxon/Mobil to buy GM as their marketing division.

Max-

I do like hatchbacks as well. I would probably opt for a wagon if I can find one that meets my specifications. When I purchased my vehicle no smaller yet nice hatchbacks were available other than the Golf/GTI.

I don't think GM is doing anything wrong. You can choose whether to buy a SUV or not, and whether to enjoy the so called incentives. After all, it's up to you when facing lures. What we can do who don't want our energy depleted so quickly is just to overlook any such offer in the market.

Max, I haven't verified your sales figures but here are the top 20 selling vehicles YTD in the US thru April 2006 from http://yahoo.reuters.com/news/articlenews.aspx?type=topNews&storyid=urn:newsml:reuters.com:20060502:MTFH45313_2006-05-02_21-50-08_N02431549&rpc=44
DETROIT, May 2 (Reuters) - The following are the 20 top-selling
vehicles in the U.S. through April of 2006 as reported by the auto
makers.

Following is a list of the top-20 selling vehicles, ranked by
total units.
RANK VEHICLE 2006 2005 '05 RANK %Chng
1 Ford F-Series pickup 264,550 260,775 1 +1.4
2 Chevy Silverado-C/K pickup 203,062 214,396 2 -5.3
3 Toyota Camry 133,978 138,939 3 -3.6
4 Dodge Ram pickup 121,200 125,043 4 -3.1
5 Toyota Corolla / Matrix 118,442 115,994 5 +2.1
6 Honda Civic 109,738 90,812 7 +20.8
7 Honda Accord 108,562 112,606 6 -3.6
8 Chevrolet Impala 90,312 87,770 8 +2.9
9 Dodge Caravan 81,191 81,696 11 -0.6
10 Nissan Altima 80,804 84,337 10 -4.2
11 Chevrolet Cobalt 71,776 51,888 24 +38.3
12 Ford Taurus 66,501 72,377 12 -8.1
13 GMC Sierra pickup 63,201 67,955 13 -7.0
14 Chevrolet Malibu 61,503 62,604 17 -1.8
15 Ford Explorer 60,488 86,386 9 -30.0
16 Ford Focus 60,168 64,916 16 -7.3
17 Ford Escape 58,279 59,179 20 -1.5
18 Chevrolet Tahoe 58,242 42,988 34 +35.5
19 Ford Econoline 58,042 58,861 21 -1.4
20 Ford Mustang 56,560 61,820 18 -8.5

Although I think it sucks and is sending the wrong message (encouraging people to buy gas guzzling SUVs and NOT conserve), it's just just a different form of incentive.

Normally slapping on rebates and incentives hurts resale value. GM puts a ton of these their vehicles, esp. the guzzlers or ones that people don't want. See http://www.cars.com/go/advice/incentives/incentivesAll.jsp. This gas incentive probably won't hurt resale value.

Also, it lets them spread the incentive cost out over 12 months.

Mitsubishi did a brief free gas for a year promo last year to help prop up their falling sales. http://cars.about.com/b/a/205228.htm

Conspiracy Alert

GM KMOWS that gasoline prices will come down (reducing their payout) because everyone knows that the auto industry and BigOil are manipulating the gasoline market... :)

Just one Fup in the supply chain will make virtually every one those cheap. Remember oil at ~$25 in 03?...Id bet on $4/g before 2...

I think its a smart play by GM. Sure, they're betting on the future price of gasoline, but I'm sure they purchased options (insurance) so that they're not the ones making the bet, but their underwriters.

It (a) likely reduces the actual cost of their rebates, (b) spreads them out over time, and (c) appeals to buyers emotions and concerns over fuel prices.

I don't like that the rebate will likley result in more fuel being consumed in net, but I don't fault GM for that -- they're role is to stay in business, and this will likely help them. There are also lots of hard working Americans who work for GM or an affiliate, and I don't want to see them all out of work at the same time either.

GM will either change, die, or change their role from "car manufacturer" to "specialty truck manufacturer" soon enough.

I do not know what people will do in years 2, 3, 4, and so on when gas will probably be more than $3 a gallon and there will be no subsidy/rebate. They obviously will be stuck with a vehicle that uses a lot of expesive fuel and has decreased resale value. I guess the automakers don't think people would think of that...

I thought we where supposed to be moving AWAY from oil dependency. Not hooking people on huge SUVs with a fuel price protection...what happens in Janruary? You're going to be stuck with this huge SUV and have to declare bankrupcy because you cant pay for the damn thing. Or trade it in.