- The Washington Times - Thursday, January 16, 2003

DETROIT, Jan. 16 (UPI) — The cost of buying a new car is the most affordable for families earning a median income of $64,185 than at anytime in last past 20 years, according to a survey by Comerica Bank Thursday.

The multi-state financial services provider said it took 19.9 weeks of wages before taxes to buy a vehicle in the third quarter of 2002, the lowest number since 1980, down from 20.9 weeks in the first six months of last year.

"Currently we are seeing the most affordable combination of price and financing since the first quarter of 1980, when a new vehicle purchase required 22.9 weeks of work," said senior vice president and chief economist David L. Littmann. "Despite the nearly half-point increase in financing rates from a year ago, the key to auto affordability improvement in the latest quarter was the impressive 6.5-percent gain in median family income over the same period."

Comerica's Auto Affordability Index is compiled from Commerce Department and Federal Reserve data.

General Motors, the world's largest automaker, Thursday reported a record $1-billion net profit in the fourth quarter on revenue of $48.7 billion as zero-percent financing and cash-back buyer rebates continued to fuel sales.

With heavy incentives, prices for most new vehicles are flat and with current interest rates on auto loans many consumers can afford costlier or better-equipped models. Also the supply of most models exceeds demand.

Littmann said vehicle prices actually declined 0.5 percent when rebates are factored in.

"Autos have no pricing power and incentives continue," Littmann told the Detroit News. "Economic fundamentals have never been better."

In early 1996, when the average median income was $44,972, it took 28.7 weeks of before tax pay to buy a new vehicle, Comerica said. Average median income grew to $64,185 by the third quarter of 2002, and it only took 19.9 weeks of median income to afford a vehicle.

Sign up for Daily Newsletters

Copyright © 2019 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times welcomes your comments on Spot.im, our third-party provider. Please read our Comment Policy before commenting.


Click to Read More and View Comments

Click to Hide