I've always dreamed of owning an adult-sized remote controlled car ;-) but all jokes aside...
Out of the slew of micro cars available (Smart, Fiat, iQ) - the iQ definitely does look the best out of all three... and from what I've read, at least outperforms one, being the Smart car.
1. I need a new car. I've been driving around this 1994 Subaru SVX for ever (and transmission recently crapped out, no surprise there) and I can tell you, premium at 23mpg isn't very nice in a world of $4 a gallon gas. Never mind the recent price cuts in gas... they're bound to bounce back, I'm sure. It's only a matter of time. So definitely for the MPG aspect AND something that isn't 20 years old or prone to breaking down and still has a warranty.
2. It fits my $25,000 life plan. A bike, a car and a home - all for under $25k combined. Granted, both the bike and car are second-hand (I never buy new, that seems mostly silly imo) and the a small living space of just under 400 square feet. I love the small living space idea and conserving energy, money, using solar panel resources. I'm not a green freak by any means but it comes down to saving me money at the end of the day, I'm all for it. Less definitely results in more. I run my entire business out of a 175 square foot office with 3 people that are in and out daily, I think the iQ definitely fits in line with my mindset.
3. 90% of the time, I'm the only one in the car. I do have a daughter and girlfriend but both will fit comfortably just fine in it when we need to get out. With that said, this is intended as my DD - not that I have a real plan in place to make something a more official family car but since the girlfriend has a decent car, there's that as well - it's just not mine. Plus, when I do upgrade to something else (I've had my eye on an Elio but since my car died I can't wait a year for it to come out), this may be a great first car to give my daughter when the time comes.
As far as what other people think, I could really care less. They're not footing the bill of gas or vehicle at the end of the day so what do I care. Plus, I'll have a nice Kawasaki Ninja to have my fun on during the summer when it really matters most

- both of which get fantastic gas mileage! To be honest, I don't think I could ever spend $16k new on one... and that's probably part of it's harder selling point... but at $10-$12k for something that has been very lightly driven (under 20k miles) and is still under warranty, it certainly seems to be of high value once all is said and done. I'm still in the works of trying to get one and I think I've found a beautiful gray metallic one that I'll have to travel slightly out of state for but if I get it, I'll be sure to post my mini road trip of it all here on the forums.
