Rent, Lease, Sell or Keep: 1999 Mazda MX-5

What would be your ideal car? Would you like to have the best of the best? A car that offers all the power and luxury an enthusiast could ever desire?

Or are your tastes a bit simpler? An amply powered but safe utility vehicle that will let you do all your work without a hint of regret about scratches or four figured maintenance bills.

This ‘ideal car’ question yields a thousand shades of gray in practice. Take this Mazda MX-5 for instance.

Rent: I know that renting a 2nd gen Miata could be like blindly pressing buttons on Jack Kevorkian’s death machine. Abuse is rampant with rentals.

But maybe not. This generation MX-5 is as tough as nails and if you find the right customers who would pay… say $59 a day… you may have a profitable undertaking.

Of course you would have to find ‘responsible’ customers. That’s the hard part. If you lived in a tourist community for the well-to-do it could work. Maine, Cape Cod, rural Montana. There are plenty of folks who would be happy to rent a nice convertible for a long weekend and pay well for the privilege. But those people aren’t typically found in Paulding County, Georgia. So renting won’t do.

Lease: On the lower end of automotive retail ($5000 or less) you try to get at least 25% of the purchase price as the down payment. That would make this Miata a $1000 down vehicle. Payments would be anywhere from $65 to $75 a week for 24 to 30 months.

That sounds like a lot. Until you realize that you’re giving someone who already cost a business thousands of dollars your car. At a $1000 down payment I am underwater by three grand. If the customer doesn’t pay, rags the vehicle out, gets into an accident without full coverage insurance, or just absconds with it… I’m screwed.

There is a lot of risk in this business. About a third of buy-here-pay-here don’t work out. Although I have an 85% success rate (which is outstanding), I can and have just as easily lost my keyster on a vehicle I finance.

The only guarantee you have as a dealer who ‘totes the note’ is risk. So you need to make sure your financial return can make up for it.

Sell: There are other risks associated with a convertible in particular. Can you sell it? A Miata is one of the more popular vehicles in the used car market. But given that we’re headed towards winter time, retailing this car may not be an easy thing.

I would likely sell it for around $5995. I bought a clean car at average wholesale. So if I’m a little price aggressive I will likely sell the car that much quicker. At 120k and the touring package I’m sure this Miata would be on the short list for a lot of buyers

Keep: What? Who me? If I were not in this business I would consider it. Every family deserves at least one fun little two seater so that the husband or wife can get away from the hassles of daily life.

So would a Miata be more fun than say.. my 2001 Honda Insight?

Yes. It would. I am a frugal fellow. But I also like to have my (Indian) pennies rapidly appreciate and raid the clearance rack of the nearby organic supermarket if I can get away with it. A Miata yields half the mileage of the Insight around town. The return though can come through the winding one lane roads of the Georgia mountains. I do a lot of driving.

It’s hard to beat a car that offers the pure, simple fun of a Miata. So…

Should I start a rental program for the well-to-do?

Finance the vehicle to a soul seeking hedonistic fun and creditworthy redemption?

Sell the vehicle in a mano-a-mano battle against father time and cold weather?

Or keep it and reward myself for buying the right car in a tough market?

What says you?

(NOTE: Please avoid the ‘name’ semantics of this article. I know that the manufacturer calls it an MX-5 while certain enthusiasts still call it a Miata. I prefer Miata. Why? I love the Miata name and wish Mazda hadn’t acronym-ed and numericded themselves into anonymity. Great cars with limited dealer networks need names.)