New Car Affordability At Historical Record High
DALLAS/May 8, 2009 – The purchase of an average-priced new vehicle took only 21.5 weeks of median family income in the first quarter 2009, according to Comerica Bank’s Auto Affordability Index. This reading is down 1.3 weeks from the prior quarter and is the lowest on record (index started in 1979). Median family income fell in the first quarter, but the total vehicle cost of buying and financing a new car fell more sharply than income, reflecting sharply falling interest rates on car loans. The total cost of buying an average-priced light vehicle fell to $26,000 in the first quarter, down $1,700 from the prior quarter. MP: Just like falling home prices are helping the real estate market to recover and heal, the highest auto affordability in history should help the ailing auto industry to recover and heal.
3 Comments:
I certainly agree that rapidly falling prices is the quickest and surest way to regain full employment. But there are obstacles to those price adjustments.
For housing, diminished portfolio values and tighter lending standards have destroyed the dream of home ownership for many Americans despite record high affordability.
With cars, the market for used cars affects new car demand. There are so many bargain 2 year old vehicles, it may be hard to sell a new car. Dealerships are reluctant to take trade ins which reduces new car sales. Dealerships are closing by the thousands and auto sales and parts make up half of retail sales job losses.
The 'cash for clunkers' proposition might help, but Obama will be abandoning environmental concerns for political and economic gain. It is more efficient vis a vis emissions to drive your guzzler until it dies and then trade it in for a fuel efficient vehicle because disposal and construction emit huge amounts of CO2 and use other natural resources.
I would love to buy a new car, but my 2002 sedan is doing just fine and I don't need a new car payment, not even with low prices and big incentives.
"Dealerships are closing by the thousands and auto sales and parts make up half of retail sales job losses"...
Are the dealerships really in that bad of a situation?
I mean I know locally here in the St. Louis, Mo area there have been some closures of even long time dealerships...
I really had no idea just how bad it is... How bad is it in California where you're at?
"The 'cash for clunkers' proposition might help, but Obama will be abandoning environmental concerns for political and economic gain"...
Not to worry, Gov. Deval Patrick is all over that particular problem...
Maybe Obama can find a solution using Deval's ideas...
Obama has found inspiration from Deval earlier on...
I mean I know locally here in the St. Louis, Mo area there have been some closures of even long time dealerships...
I really had no idea just how bad it is... How bad is it in California where you're at?The same in NorCal.
Classic depression, goods are cheap like dirt but no one can afford them.
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