I came across this story the other day on CNN.com.
First, it stunned me when I read that Marci Solomon had to bid $7,300 on eBay just to buy this '96 Geo Metro.
- Obviously, it gets excellent gas mileage, which is huge considering the price of gas today
- It's in great shape (it had less than 40,000 miles on it because it was owned by an elderly couple that didn't drive that much)
- Hatchbacks are versatile in that if you fold down the back seat, you can haul relatively large objects with no problem whatsoever
- The thing's got a three-cylinder engine. Even the Ford Festiva, a Kia-built car that I drove from 1992 to 1999, had a four-cylinder engine. Three cylinders stinks because if one cylinder goes, you're down to two cylinders and that won't be enough to get you anywhere. You need at least four cylinders.
- Never mind the lack of creature comforts. I could live with manual locks and hand-crank windows. But like the Festiva, the Metro's a cardboard box on wheels.
- Also, like the Festiva I used to drive, Solomon's Metro has no air conditioning.
According to the CNN.com story, $7,300 is more than five times the Blue Book value of the car. So let's suppose the actual Blue Book value was less than one-fifth of the selling price--$1,400. That means the buyer paid $5,900 more than it was worth. How long will she have to drive the car for it to be worth that extra $5,900?
Let's do a little math, shall we:
- She was paying $100/week with a car that was getting 28 mpg (the Honda Element).
- Divide that $100/week by $4/gallon and you get 25 gallons per week.
- 25 gallons a week times 28 mpg is 700 miles a week.
- Now, 700 miles a week divided by 40 miles per gallon means that now she'll be buying 17.5 gallons each week, so she's buying 7.5 fewer gallons each week than with the Honda.
7.5 gallons times $4 is $30/week savings.
- Divide that $5,900 by the $30/week, and she would have to drive the car for 197 weeks to get back the money she overpaid.
- That's more than three years and 9 months, ladies and gentlemen. Three years and 9 months from now, it will be the year 2012, and that Geo Metro will be about 16 years old. And it would have close to 180,000 miles on it.
Advantage: Seller. One CNN.com reader called it case of being penny-wise and pound-foolish, and I couldn't agree more.