• Aug 18, 2009
A study by Comerica Bank shows that the average purchase price of a new vehicle went up $300 in the second quarter versus the Q1, bringing the average transaction price to $26,300. The upward swing in prices came at a time when the average household income remained stagnant. The average family needs 22.1 weeks of median family income to pay for their new vehicle purchase, up .3 weeks from Q1. According to the study, higher transaction prices were slightly offset by lower financing rates, down to a very low average of 3.45%; the lowest rate in five years.

Comerica says that the reason the average purchase price rose in Q2 is that customers were buying more expensive cars. That's a bit odd in such a down economy, although lower overall sales could mean that customers who would normally purchase lower priced vehicles stayed out of dealerships altogether. The lower interest rates and higher transaction rates tells us that automakers are likely offering more 0% financing offers, which typically replaces heavy rebates in return for a lower monthly payment. Comerica Chief Economist Dana Johnson feels the average vehicle transaction price will ultimately come back down in Q3, due in part to the success of Cash for Clunkers. Hit the jump to read over the official press release.

[Source: Comerica Bank | Image: Karen Bleier/AFP/Getty]

PRESS RELEASE:

DALLAS, Aug. 17 /PRNewswire-FirstCall/ -- The purchase of an average-priced new vehicle took 22.1 weeks of median family income in the second quarter 2009, according to Comerica Bank's Auto Affordability Index. This reading is up 0.3 of a week, thereby representing a slight deterioration in affordability compared to the prior quarter. Median family income was essentially unchanged in the second quarter. The total cost of buying and financing a new car rose, however, due entirely to the fact that consumers chose to buy more expensive cars on average. The average price of a light vehicle purchased in the second quarter rose by $300 to $26,300.

(Logo: http://www.newscom.com/cgi-bin/prnh/20010807/CMALOGO)

"While consumers opted to buy more expensive vehicles last quarter, a sharp drop in financing costs held down our affordability index," said Dana Johnson, Chief Economist at Comerica Bank. "Reflecting the partial normalization of credit markets, the average rate paid on a car loan at finance companies was only 3.45 percent last quarter, the lowest level seen in five years. In the current quarter, our affordability index very possibly will reach a new best reflecting the cash-for-clunkers program that is now in place."

This report incorporates the latest data on consumer spending on light vehicles and on the terms available on auto loans. The full history of the Index is available upon request.

Comerica Incorporated is a financial services company headquartered in Dallas, Texas, and strategically aligned by three business segments: The Business Bank, The Retail Bank, and Wealth & Institutional Management. Comerica focuses on relationships, and helping people and businesses be successful. In addition to Texas, Comerica Bank locations can be found in Arizona, California, Florida and Michigan, with select businesses operating in several other states, as well as in Canada and Mexico. Comerica reported total assets of $63.6 billion as of June 30, 2009. To receive e-mail alerts of breaking Comerica news, go to http://www.comerica.com/newsalerts.


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    • 1 Second Ago
  • 50 Comments
      • 5 Years Ago
      Who is this Median family and why aren't they paying for my car?
        • 5 Years Ago
        I just found out. It's because they're 'mean'.

        HA! Math humor!
      • 5 Years Ago
      "An email has been sent to confirm the comment"

      Uh, the password in the field is correct.

      And another thing, why can't I log in to the account manager thingy?
        • 5 Years Ago
        And now it posts, what the hell?
        • 5 Years Ago
        I have had the same problems. I would like to change my avatar but when I try to log into my account it says Password incorrect or invalid. And yet it's the same password I use to post (when that works). ???
      • 5 Years Ago
      I'm more amazed the average price of a new car is ONLY 26 grand. I'd think with all the cross overs/suvs/pickups, that would be higher. Not saying that's a good thing, just saying there are a LOT of expensive cars out there....
      • 5 Years Ago
      So median income is $61,882 nationally? That'd be nice in most states, good luck in NJ on that, hope you like to rent.
        • 5 Years Ago
        Yes, for people who purchase cars. I'm sure the number for the general public is close to that, but not the same.
        • 5 Years Ago
        That's median FAMILY income. Median individual income is lower.
        • 5 Years Ago
        That was going to be my question...

        Is there an adjustment for the fact that the median household income families may be more likely not to buy new. (and in some cases, that is preferable...)

        I would hope their stats would be adjusted for the average of new car buyers, not just the average of everyone.

        I have never bought a new car, although I almost did a few years back. Used actually fit my preferences better than new inventory, PLUS the advantage of not eating as much depreciation.

        My household income has fluctuated with employment changes, both above and below the average. But debt is something I am trying to avoid more and more.

        I wouldn't finance half a year's wages for 4, 5, or even 6 years for a new car. But that is just me.
      • 5 Years Ago
      Factor in the 30% combined federal and state income taxes most of us deal with and it's more like 30 weeks.
        • 5 Years Ago
        I was wondering how long it would take before the "Gov't takes too much money" comments came out to play.
      • 5 Years Ago
      Watch this video:

      http://www.daveramsey.com/etc/lms/drive_free/player.cfm

      Although I don't agree with 100% of what Dave Ramsey talks about and his assumptions aren't always accurate, if you cut it down to bare bones, it makes complete sense when owning a car. I don't mind paying a little more for a nicer fun reliable car, but the key is to pay it off ASAP and drive it till it doesn't make economic sense to keep and by that time, you should have enough money to pay off the next car or at least a big chunk of it.
      Man of men!
      • 2 Years Ago
      I know many young adults buy near luxury cars and they make working class wages. The think these cars represent who they are and their lifestyle of upper class yippies. Too bad they do not have any money for emergencies.
      • 5 Years Ago
      LOL my 91 s-10 only counts as 2 weeks of my income...
      (Paid-for cars is the only way to drive)
        • 5 Years Ago
        89' Cadillac Fleetwood

        3 days worth of income.
        • 5 Years Ago
        +1 brotha. Finish payments in 2 months on my 6-year-old car, its in great shape and I plan to drive it debt-free for another 6 years.
      • 5 Years Ago
      I use only my company car (2010 Ford Fusion) and my wife's 2006 Mazda 3 is paid off as well our our GTS 250 Vespa scooter and we make about $140k a year. Just renting and waiting for housing to continue to go lower before we decide to buy our first home. We will not be in the market for a car for another 5 years.
        • 5 Years Ago
        Stop making me wish I started out that way.
        • 5 Years Ago
        What, you are living within your means? What is wrong with you?

        Sounds very much like my situation except we have a Civic, I use public transportation to get to work and have a Harley Nightster rather than a Vespa (they cost about the same - Vespas are pricey) and fortunately live in an area were home values stayed consistent (still going up about 5% -10% a year) so we bought a few years ago and pay less than rent.
      Debbie F
      • 2 Years Ago
      xx
      • 5 Years Ago
      "Comerica says that the reason the average purchase price rose in Q2 is that customers were buying more expensive cars."

      Ya think?
        • 5 Years Ago
        I love when people say the same thing twice in one sentence! Helps us dumb people out here understand.
      • 5 Years Ago
      This is not a good sign - the credit mess is what started the ball rolling downhill. I've read in different places that 12-15% of annual salary is a good number to go by, so using averages its about $550/month for the typical American household making around $50-55K/year. But Massive incentives from automakers pushing zero first payments and 84-month finance options that are making more expensive cars available to people that don't have the money to buy them. Instead of buying a mid-level Altima people want a G37, and with drawn out payment plans it makes it possible to do so, even though we all know cars are a horrible investment by any stretch. It all catches up - buyers have to think down the road.
        • 5 Years Ago
        People are stupid because public schools do not teach economics and personal finance.

        Just because some one is willing to sell a person a car worth 50% of annual salary does not make it a good idea. How about some personal responsibility founded on education and basic understanding of finances?
        • 5 Years Ago
        re:aliasfox,

        You're compounding this into one years salary. Yes, if you want to buy a car outright with one year's salary and you make $100K, you would be wise to spend not much more than $15K - cars depreciate like crazy and are typically your worst investment. Instead of spending 20-25% of your income on a car, buy something that meets your needs and put 10% in an investment. Instead of your car that loses 20% of its value in the first year, your investment will actually gain you between 2-10%. Simple economics that the average income family needs to understand in order to retire comfortably. But obviously, most people don't save for only 1 year to buy a car, or they finance at least over 3 years, giving that same six-figure driver $45K, which is a far cry from a Mazda3.
        • 5 Years Ago
        15% of an annual salary of $60k is $9,000. 15% of $100k is only $15k - which isn't even enough for a reasonably equipped Mazda3, and I bet most of us would agree that someone who makes six figures is someone who can roll around in something a little better than a low priced compact car.

        The amount one can (or should) spend on a car varies greatly by one's household status - if you're making $60k by yourself, in most non-urban areas, that's pretty decent and you're probably saving a lot of money, even with putting away for retirement, etc. On the other hand, if you have a household income of $60k with a wife and two kids, even spending 10-15% of that on a car could be incredibly burdensome.

        That said, I recently finished paying off my 2007 GTI (purchased new), and I'm happy to not have a monthly payment to deal with anymore... and because of this newfound freedom, I doubt that I'll finance more than $10k of my next car, just to keep monthly spend in check.
        • 5 Years Ago
        You are right, thinking down the road is what we have been doing poorly. I like the idea of looking at major purchases based on weekly net income.

        LCD TV - 2 weeks net pay
        Jeep Grand Cherokee - 18 weeks net pay
        House - 350 weeks net pay

        OMFG!
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