The purchase and financing of an average-priced new vehicle took 24.2 weeks of median family income in the third quarter of 2011, slightly more than the 24.0 weeks of median family income in the second quarter. Consumers on average spent $650 more (an increase of 2.6 percent) on new cars in the third quarter.
“Auto affordability fell in the third quarter of 2011, continuing a declining trend off the 2009 peak,” said Robert Dye, Chief Economist of Comerica Bank in Dallas. “A key issue in falling auto affordability is weak income growth, which we have seen through 2011. Tepid job gains and flat wages are keeping income growth in check, and this is a drag against a typical post-recession rebound in auto sales. The good news for auto dealers is that production is back up after the supply-chain disruptions of earlier this year. Interest rates are low and there is a lot of pent-up demand for new autos. New auto sales in October held on to the September gains. Going forward we simply need to see more job creation to support ongoing improvement to auto sales.”
This report incorporates the latest data on consumer spending on light vehicles and on the terms available on auto loans. The full history of the Index is available upon request. Some historical data is in the process of being revised by the data sources and, as a result, revisions to the auto affordability series are expected in the months ahead.