The purchase and financing of an average-priced new vehicle took 23.6 weeks of median family income in the fourth quarter of 2012, according to Comerica Bank’s Auto Affordability Index. Consumers on average spent $900 more on new cars in the fourth quarter of 2012 than they did in the third quarter.
Auto affordability slipped slightly in the fourth quarter of 2012, declining by 0.4 weeks of median family income. Robert Dye, chief economist at Comerica Bank in Dallas, said slightly higher interest rates and an increase in the average consumer expenditure per new car drove the decrease in affordability. “Although median family income was also estimated to have increased, this increase was not enough to offset the rise in rates and expenditures,” he said.
Dye said that vehicle sales through January have held up well, although there has been a distortion in recent sales data because of Hurricane Sandy. “Sales surged after Hurricane Sandy to a 15.5-million-unit rate in November and have since dipped to a 15.2-million-unit rate by January,” he explained. “Downside risk from cuts in federal spending still lurks for auto sales and many other U.S. economic variables through the first half of 2013.”
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