Auto Affordability Worsens, Comerica Reports
November 11, 2008
By Michelle Krebs
Auto affordability, which has become better and better for consumers in the past couple years, worsened in the third quarter, according to the Auto Affordability Index compiled by Dallas-based Comerica Bank.
The index showed a confluence of factors: family income barely increased in the third quarter, the total cost of buying an average-priced vehicle increased and the credit crunch is taking its toll on affordability.
That cost, which includes financing charges, rose to $28,929, up about $1,200 from the previous quarter. But even excluding finance charges, the new car cost increased 5 percent to 25,200 from the previous quarter.
As a result, it is taking longer to pay for a new vehicle. The purchase of an average-priced new vehicle took 24.1 week of median family income in the third quarter, that's one additional week from the second quarter but still down 1.1 weeks from a year ago.
Comerica Chief Economist Dana Johnson was surprised by the increased cost of a new vehicle.
"In all likelihood, many moderate income buyers pulled out of the market due to the limited availability of financing, thereby temporarily inflating the average amount of money spent on a new car," Johnson said. "A sharp drop in loan-to-value ratios -- to the lowest level in three years -- was another indication that tight auto financing conditions were a restraint for many potential buyers."
Source: Comerica Bank
Posted by Michelle Krebs at 11:27 AM under Analysis , Business | Comments (0) | digg this | Seed Newsvine
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