The purchase and financing of an average-priced new vehicle took 23.1 weeks of median family income in the third quarter of 2012, according to Comerica Bank’s Auto Affordability Index. Consumers on average spent $75 less on new cars in the third quarter of 2012 than they did in the second quarter. The historical series for 2011 and 2012 has been revised, based on more up-to-date annual family income data.
“Auto affordability improved by 0.2 weeks of median family income, enough to boost Q3 auto sales to a 14.9 million unit rate in September,” said Robert Dye, Chief Economist at Comerica Bank in Dallas. “Income growth through Q3 was weak, but interest rates on auto loans fell, lifting affordability. Given the combination of pent-up consumer demand and the need to replace vehicles destroyed by Hurricane Sandy, vehicle sales spiked to a 15.5 million unit rate in November. Sales may ease a bit in coming months, but ample credit availability and a low rate environment remain positives for the auto market. Downside risk from the Fiscal Cliff is significant for auto sales and many other U.S. economic variables through the first half of 2013.”
Click here for a PDF version of the Auto Affordability Index: affordabilityDec12.