The purchase and financing of an average-priced new vehicle took 23.1 weeks of median family income in the fourth quarter of 2011, the best affordability reading since the third quarter of 2009. Consumers on average spent $1,050 less (a decrease of 4.0 percent) on new cars in the fourth quarter.
“Auto affordability improved at the end of 2011, boosted by gains in personal income that were, in turn, supported by stronger job creation,” said Robert Dye, Chief Economist of Comerica Bank in Dallas. “Household credit conditions are also improving, as shown by the low household financial obligations ratio, which measures total debt payments as a percentage of income. When you put those two concepts together, it means that households are increasingly willing to take on a reasonable amount of debt by purchasing an attractively priced automobile. Those favorable trends are allowing consumers to feel more confident about unleashing their pent-up demand for automobiles. Favorable affordability and improved job growth mean more upside potential for auto sales in early 2012.”