Auto Affordability Improves Again during Third Quarter of 2012
"Income growth through Q3 was weak, but interest rates on auto loans fell, lifting affordability," said Robert Dye, chief economist at Comerica Bank in Dallas. "Sales may ease a bit in coming months, but ample credit availability and a low rate environment remain positives for the auto market," he added.
Since 2000, vehicles have generally been more affordable than in the previous two decades, reaching a peak Auto Affordability Index in 2009. Affordability steadily increased during the first three quarters of 2012. However, Dye warns that the trend could reverse in early 2013: "Downside risk from the fiscal cliff is significant for auto sales and many other U.S. economic variables through the first half of 2013."