The high price of gas has sparked a fad for the fuel-sipping Geo Metro, a tiny, rebadged Suzuki hatchback Chevrolet dealers sold from the late 1980s to 1998.
The Geo could be called the "if you can't beat 'em, join 'em" brand. General Motors (GM) and its Detroit rivals at the time offered fuel-efficient cars co-developed with Japanese partners including Suzuki (SZKMF), Mitsubishi (MMTOF), and Toyota Motor (TM), but only GM created a separate brand for its import-inspired small cars.
Like the Geo Metro, several of these models were both imported and built in joint-venture factories in North America. They included the Geo Prizm, which was co-developed with Toyota. GM dropped the Geo brand at the end of 1997, but continued to offer the former Geo Metro, Geo Prizm, and the small Geo Tracker SUV for a few more years, renamed as Chevrolets. Sales petered out as domestic brands moved to bigger vehicles, especially SUVs.
A Little Pricing Confusion
Fortunately for bargain hunters, Geo Metros aren't scarce. GM sold more than 700,000 from 1989 to 1998. At various times, body styles included a Geo Metro sedan, a hatchback, and even a little two-door convertible. AutoTrader.com online classified ads listed 51 Geo Metros nationwide recently, ranging in price from $500 to as high as $7,000.
Watch out for those $7,000 ones. The Geo Metro was only about $8,000 to $10,000 suggested retail when it was new. According to Automotive Lease Guide, a benchmark for resale values, the average new car depreciates 40% as soon as it's driven off the lot, and 55% after three years. That makes a $7,000 Geo Metro sound like a poor value, unless it has about $5,000 cash in the glove compartment.
In general, prices for newer models of small used cars are rising while other segments' prices are down, especially big pickups and SUVs. This trend should be encouraging for Chevrolet, which announced in late 2007 it will build a minicar based on the Beat concept car, co-developed with its South Korean partner, GM Daewoo.
Don't Expect Zip
The idea is to build a successor to the old Geo concept, but the modern minicar will be sold as a Chevrolet from the beginning, and the underlying platform will be more thoroughly integrated into GM's worldwide lineup. The new car is expected to get 50 mpg, with production starting in 2009. The Beat-based car was not expected to come to the U.S. market right away, but if people are lining up to buy 10-year-old Geo Metros, maybe GM ought to rethink that.
Before jumping on the bandwagon, shoppers should keep in mind that older cars with tiny engines like the 55-hp Geo Metro offer dismal acceleration—take the Metro's zero to 60 mph in a leisurely 12 seconds. For many, that may seem an acceptable trade-off for mileage that rivals a gasoline-electric hybrid. Regular gas hit an average national price of $3.95 per gallon on May 29, vs. $3.20 a year ago, according to the American Automobile Assn.'s Daily Fuel Gauge Report.
The 1997 Geo Metro gets an estimated 44 mpg on the highway, according to the U.S. Energy Dept.'s fueleconomy.gov Web site. The site says its estimate is more realistic than the car's original EPA highway estimate of 49 mpg.
Safety Standards Have Changed
At 44 mpg, $3.95 per gallon, and 15,000 miles a year, that's an estimated annual fuel cost of about $1,357. But the Toyota Prius, with twice as much horsepower as the Geo Metro, gets an EPA-estimated 48 mpg city/45 mpg highway.
Beyond performance, a potentially more serious trade-off is safety. Older cars may lack safety features that we take for granted on newer cars, such as antilock brakes and side air bags. Even a strong advocate for fuel efficiency like the autobloggreen.com Web site points this out. The Geo Metro has front air bags for the driver and passenger, but antilock brakes were optional, and there are no side air bags, according to edmunds.com.
In addition, the rise in demand is making it harder to find a bargain. The average wholesale auction price of a 1997 Geo Metro sold in May, 2008, is about $953, according to Tom Kontos, executive vice-president, customer strategies and analytics for ADESA, a used-car auction firm based in Carmel, Ind.
Prices at Auction Going Up
That's an increase of more than $200, or about 27%, vs. a 1996 model sold in May, 2007, Kontos says. According to the carsdirect.com shopping Web site, retail prices for a 1997 Geo Metro today range from about $800 to $1,100, when sold from one individual to another. Retail prices at a dealership are about $1,000 higher, carsdirect.com said.
Kontos says wholesale auction prices for compact cars were up an average of 7.2% in April vs. a year ago. In contrast, prices for full-size pickups were down 15%.
Atlanta's Manheim Auctions reported similar results. As of April, 2008, Manheim said, wholesale auction prices were down 15.8% from that month a year ago for full-size pickups. At the same time, it said, prices were up an average of 10.2% for what it classifies as entry-level compact cars, like the Geo Metro, Kia Rio, Toyota Yaris, Hyundai Accent, and others.
Bursting the Truck Bubble
Kontos at ADESA says prices have fallen so much for used full-size pickups and SUVs, they might be more economical than they appear. For instance, he says the average price for a full-size used SUV has fallen close to $2,000 in the last year. Kontos says that even at only 15 mpg, it would take 40 months of higher gas prices to outweigh the drop in the price of the vehicle.
The bust in used truck prices could create opportunities for bargain-hunters, Kontos says: "The bursting of the truck 'bubble' may be somewhat similar to what has been seen in other markets such as housing and stocks, where shrewd opportunists are often able to capitalize on undervalued assets."