News & Resources

Median income auto affordability declines in third quarter

Nov 25, 2011 Randy Mosteller

The auto industry has shown marked improvements in recent months, having taken a major blow from the economic downturn. As loan originations in the sector have improved, so has affordability. However, the purchase and financing of an average-priced new vehicle became more expensive as a share of median family income in the third quarter, accumulating 24.2 weeks of pay. That figure is up slightly from the 24 weeks of median income noted in the second quarter, according to the most recent report from financial services firm Comerica. Meanwhile, consumers spent an average $650 more on new cars during the July-September period, up 2.6 percent from the previous quarter. "A key issue in falling auto affordability is weak income growth, which we have seen through 2011," said Robert Dye, chief economist at Comerica Bank in Dallas. "Tepid job gains and flat wages are keeping income growth in check, and this is a drag against a typical post-recession rebound in auto sales." However, auto dealers can bask in the fact that vehicle production is on the mend after a series of supply chain disruptions noted earlier this year.