Auto Affordability Steady; Decline Ahead?
DALLAS — Auto affordability showed no sequential change in the first quarter, but average car loan rates climbed to a two-year high and consumers were buying pricier vehicles, according to Comerica Bank.
Those two factors could lead to auto affordability falling, the bank indicated.
Specifically, it required 23.2 weeks of median family income to buy and finance an average-price vehicle during the first quarter. This is the same level as the previous quarter.
There was a 2-percent (or $400) increase in the average amount consumers were paying for new vehicles and the average rate on a car loan was up to 4.7 percent, according to the report. The last time rates were that high was the first quarter of 2009, Comerica indicated.
“The total cost of purchasing a new vehicle increased approximately $425 in the first quarter of 2011, as consumers opted for more expensive cars against a backdrop of rising rates,” shared Dana Johnson, chief economist at Comerica Bank in Dallas.
“Looking ahead, affordability has the potential to erode as financing costs and consumer appetites for more expensive vehicles increase,” Johnson added.