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AUTO AFFORDABILITY IMPROVES IN THIRD QUARTER

 DETROIT, Nov. 9 /PRNewswire/ -- It took less median family income to purchase the average new car in the third quarter than in the second quarter of 1993, according to Commerce Department and Federal Reserve data compiled by Comerica Bank.
 According to Comerica's Auto Income Absorption Index, it took 30.2 weeks of median family income (pre-tax) during the summer quarter to finance the average new car purchase, compared with 30.6 weeks in the spring quarter, according to David L. Littmann, first vice president and senior economist with Comerica Bank in Detroit.
 "For the first nine months of 1993, absorption of family income from down payment and financing of a new vehicle averaged 30.2 weeks, compared to 30.4 weeks for the same year-to-date three-quarter period last year," Littmann reported. "By contrast, the least affordable comparable period was 1991, when average car-financing rates were 12.6 percent, roughly four percentage points above third-quarter 1993 levels."
 Average purchase prices were up 4.2 percent vs. the third quarter of 1992; average financing rates were 1/8 percent lower; and the length of the average loan increased to 54.8 months vs. 53.5 months a year earlier.
 Littmann said the latest data are also noteworthy because there has never been as large a divergence between import and domestic new car expenditures as exists today. "Between 1967 and 1981, average consumer expenditures on new domestic cars averaged up to 50 percent more than on import cars. During that time, the share of car sales going to imports rose from 15 to 27 percent. However, after 1981, the opposite process occurred, with expenditures on new import cars exceeding domestics by 1 to 17 percent. Since 1987, import shares have declined. The latest data suggest that import car expenditures exceed domestics by a record 28 percent, a factor that will presage further erosion of import share," Littmann 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- 11/9/93
 /CONTACT: David L. Littmann, first vice president and senior economist of Comerica Bank, 313-222-7241/
 (CMA)


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

ML -- DE019 -- 2328 11/09/93 14:05 EST
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Date:Nov 9, 1993
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