The Geo Metro Rides Again, Sort Of

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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."

Henry is a reporter covering the automotive industry and automotive trends in BusinessWeek's New York office.