Auto Affordability Improves Again -- Comerica Index
11 August 1999
Auto Affordability Improves Again -- Comerica Index
DETROIT--Aug. 11, 1999--The purchase of an average-priced new vehicle during the second quarter of this year required 23.6 weeks of median family income, before taxes, according to the Auto Affordability Index compiled by Detroit-based Comerica Bank. This compares with 23.7 weeks of income required for purchase in the first quarter. During the same quarter a year earlier, a new vehicle purchase took 24.8 weeks of income, Comerica reported.The average vehicle price in the second quarter was $20,802.
"Vehicles remain at their most affordable level in 19 years, with the current 23.6 weeks of required income rivaling the average 23.5 weeks recorded in 1980," said David L. Littmann, chief economist at Comerica.
"Family incomes continue to rise faster than vehicle prices, while financing rates remain flat. This is the principal reason for improved affordability, and it is driving this year's record vehicle sales pace," Littmann said.
Incomes rose 5.1 percent between the second quarters of 1998 and 1999, Littmann noted. Meanwhile, auto incentives and rebates have brought the average auto transaction price down by 0.7 percent during this same period. Average auto financing rates are at 7.43 percent and have remained at nearly the same level for five consecutive quarters.
Between the first and second quarters of 1999, family incomes rose 1.3 percent, compared with a 0.9 percent increase in auto prices.
Comerica's Auto Affordability Index is compiled from Commerce Department and Federal Reserve data.
Comerica Bank, the largest bank in Michigan, is the lead subsidiary of Comerica Incorporated , a multi-state financial services provider headquartered in Detroit, with banking subsidiaries in Michigan, California and Texas, banking operations in Florida, and businesses in seven other states. Comerica also operates banking subsidiaries in Canada and Mexico. Comerica is celebrating its 150th anniversary in 1999.