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Auto Affordability is Best in 19 Years - Comerica Bank Index

19 May 1999

Auto Affordability is Best in 19 Years - Comerica Bank Index

    DETROIT, May 19 -- The purchase of an average-priced new
vehicle during the first quarter of this year required 23.7 weeks of median
family income, before taxes, according to the Auto Affordability Index
compiled by Detroit-based Comerica Bank.  This compares to 24.2 weeks of
income required in the fourth quarter of 1998.
    The average vehicle price in the first quarter was $20,611.
    "Vehicles now are at their most affordable level in 19 years," said David
L. Littmann, Comerica chief economist.  "Not since the second quarter of 1980
have cars been this affordable, when you consider all the variables that go
into a vehicle purchase."
    The principal factors leading to improved auto affordability in the first
quarter were rapid income gains and lower financing rates, Littmann said.
"Compared with a year earlier, median family income grew 5.0 percent, far
outstripping the 0.4 percent gain in average consumer outlays on new vehicles.
Likewise, average financing rates fell to 7.38 percent, compared with
7.60 percent in the first quarter of 1998, and 7.70 percent in the final
quarter of last year."
    Littmann cautioned that some of the good news on affordability trends is
likely to be erased by upward price and interest rate movements in the current
quarter.
    Comerica's Auto Affordability Index is compiled from Commerce Department
and Federal Reserve data.
    Comerica Bank, the largest in Michigan, is the lead subsidiary of Comerica
Incorporated , a multi-state financial services provider
headquartered in Detroit, with banking subsidiaries in Michigan, California
and Texas, banking operations in Florida, and businesses in seven other
states.  Comerica also operates banking subsidiaries in Canada and Mexico.
Comerica is celebrating its 150th anniversary in 1999.