Geo Metro Craze as Buyers Snap up the fuel-sippers for High Prices

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The Geo Metro Rides Again
by Jim Henry
Business Week

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.

Full Article: The Geo Metro Rides Again, Sort Of