US: 'Auto Affordability' near index best - Comerica

17 August 2009 | Source: just-auto.com editorial team

The purchase of an average-priced new vehicle in the US took 22.1 weeks of median family income in the second quarter 2009, according to Comerica Bank's Auto Affordability Index.

This reading is up 0.3 of a week, thereby representing a slight deterioration in affordability compared to the prior quarter. Median family income was essentially unchanged in the second quarter. The total cost of buying and financing a new car rose, however, due entirely to the fact that consumers chose to buy more expensive cars on average. The average price of a light vehicle purchased in the second quarter rose by US$300 to US$26,300.

"While consumers opted to buy more expensive vehicles last quarter, a sharp drop in financing costs held down our affordability index," said Dana Johnson, Chief Economist at Comerica Bank. 
"Reflecting the partial normalisation of credit markets, the average rate paid on a car loan at finance companies was only 3.45 percent last quarter, the lowest level seen in five years.  In the current quarter, our affordability index very possibly will reach a new best reflecting the cash-for-clunkers program that is now in place."

The Comerica report incorporates the latest data on consumer spending on light vehicles and on the terms available on auto loans.