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AUTO AFFORDABILITY AT BEST LEVEL IN 5+ YEARS

 DETROIT, Aug. 24 /PRNewswire/ -- During the first half of 1993, the affordability of new cars improved by seven-tenths of a working week versus the same period a year ago, according to the Auto Income Absorption Index compiled by Detroit-based Comerica Bank. First-half improvement occurred despite a second quarter decline of one-half week in affordability compared with the first quarter.
 "It took 30.2 weeks of median family pre-tax income in the latest quarter to finance the average new car purchase, compared with 29.7 weeks in the first quarter," said James M. Bills, assistant vice president and economist at Comerica Bank.
 "The good news is that, for the first six months of this year, the average number of weeks of work required to obtain a new passenger vehicle was less than 30, marking the best such six month affordability period since the second half of 1987. Moreover, we had relatively modest increases in the average purchase price of cars, which rose only 2.3 percent year to year, and average financing rates were more than 1.6 percentage points lower than a year ago, leaving total car costs a tad lower than those in the June quarter last year," Bills said.
 "The bad news is that median family income advanced only 1.0 percent over that 12-month period, making it one of the most anemic economic growth periods on record, especially when one considers the effects of tax increases and inflation on real purchasing power of families."
 Bills noted that the latest affordability numbers also marked the third consecutive quarter of lengthening car loan repayment periods, now at 54.5 weeks. "This is a full week longer than the average repayment period last fall, but precisely the same as in the June quarter a year earlier," he said.
 The Auto Income Absorption Index is based on median family income divided by the total cost of an auto. Total cost includes both price and finance charges and is derived by calculating the average down payment plus average monthly payments over the life of the loan.
 -0- 8/24/93
 /CONTACT: James M. Bills, Assistant Vice President & Economist, Comerica Bank, 313-222-3165/
 (CMA)


CO: Comerica Bank ST: Michigan IN: AUT FIN SU: ECO

KE -- DE014 -- 5518 08/24/93 14:53 EDT
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Publication:PR Newswire
Date:Aug 24, 1993
Words:379
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