Comerica: Auto Affordability Improves in 3Q12
Cars became more affordable for consumers in the third quarter, according to Comerica Bank’s Auto Affordability Index, which was released yesterday.
The index found that buying and financing an average-priced new car took 23.1 weeks of median family income, and buyers spent $75 less last quarter than they did on new cars in 2Q12.
“Auto affordability improved by 0.2 weeks of median family income, enough to boost Q3 auto sales to a 14.9 million unit rate in September,” said Comerica Chief Economist Robert Dye.
While income growth through the third quarter was weak, auto-loan interest rates dropped, which caused affordability to rise. 
“Given the combination of pent-up consumer demand and the need to replace vehicles destroyed by Hurricane Sandy, vehicle sales spiked to a 15.5 million unit rate in November,” Dye said. “Sales may ease a bit in coming months, but ample credit availability and a low rate environment remain positives for the auto market.”
Among those positives could be an obstacle: the impending “fiscal cliff,” billions of dollars’ worth of automatic tax increases and spending cuts slated to go into effect Jan. 1, 2013. Should Congress and the Obama administration not stop it, many government analysts fear the “cliff” could cause another recession.
“Downside risk from the fiscal cliff is significant for auto sales and many other U.S. economic variables through the first half of 2013,” Dye said.
Dallas-based Comerica Inc. has bank branches in Texas, Arizona, California, and Michigan, and select business operating in several other states, as well as Canada and Mexico.
