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Americans Paid More for New Cars in Fourth Quarter of 2012, According to Comerica Index

Americans Paid More for New Cars in Fourth Quarter of 2012, According to Comerica Index

By Jeff Youngs, March 20, 2013
Each quarter, Comerica Incorporated, a Dallas-based financial services company, tracks consumer auto loan terms and interest rates, and average new-vehicle transaction prices, to create the Comerica Bank Auto Affordability Index. The financial institution released its fourth quarter findings for 2012, which show that Americans spent an average of $900 more on a new vehicle in the final quarter of last year than they did during the preceding quarter.

While median family incomes also rose during the same time period, Comerica says that the $900 increase did not offset the rise in interest rates or expenditures on new vehicles. As a result, it took 23.6 weeks of median family income to purchase a new vehicle in the fourth quarter of 2012.

"Auto affordability slipped slightly in the fourth quarter of 2012, declining by 0.4 weeks of median family income," said Robert Dye, chief economist at Comerica Bank in Dallas. "Driving the decrease in affordability was a combination of slightly higher interest rates and an increase in the average consumer expenditure per new car."

Dye notes that there is a distortion in the fourth quarter sales data due to consumers replacing vehicles following Hurricane Sandy, which struck the East Coast on October 29, 2012. Additionally, Dye says, "downside risk from cuts in federal spending still lurks for auto sales and many other U.S. economic variables through the first half of 2013."