Auto Affordability Reverses After 10 Quarters of Improvement

21 November 2000

    DETROIT, Nov. 20 The purchase of an average-priced new
vehicle during the third quarter of 2000 required 23.2 weeks of median family
income, before taxes, according to the Auto Affordability Index compiled by
Detroit-based Comerica Bank.  This compares with 23.0 weeks of income required
for purchase in the second quarter.  During the same quarter a year earlier, a
new vehicle purchase took 24.4 weeks of income, Comerica reported.
    The average vehicle price in the third quarter was $21,804, up $118 from
second quarter, but down $657, or 2.9 percent from the same quarter a year
ago.
    "Higher borrowing costs played a major role in reversing the 10-quarter
improvements," said David Littmann, chief economist with Comerica Bank.
"Average rates rose more than 0.5 percent in the third quarter, up nearly a
full percentage point from a year ago, and at the highest point in three
years."
    Comerica's Auto Affordability Index is compiled from Commerce Department
and Federal Reserve data.