DALLAS — The purchase and financing of an average-priced new vehicle took 23 weeks of median family income in the fourth quarter 2009, according to Comerica Bank's Auto Affordability Index. The fourth quarter reading showed affordability fell by 1.1 weeks from the Index's revised third quarter best of 21.8 weeks of median family income.
The average total cost of a new car increased by $1,500 to $27,000, a 6 percent increase from the previous quarter. Median family income is estimated to have risen at a 2 percent annual rate in fourth quarter. The average rate on car loans fell 19 basis points to 3.47 percent.
"Affordability deteriorated in the fourth quarter, with most of the erosion almost certainly due to the expiration of the Cash for Clunkers rebate program," said Dana Johnson, chief economist at Comerica Bank. "The effect of the program can be seen quite clearly in the bounce back that began in September in the average amount consumers spent on cars. A small rise in median family income and a small decline in financing rates offset only a small part of the sharp increase in car expenditures."
This report incorporates the latest data on consumer spending on light vehicles and on the terms available on auto loans. The full history of the Index is available upon request.