Are Cars more Affordable Now?

It may not seem like it, but cars today are cheaper than they've been in the past 25 years.

According to Michigan-based Comerica Bank's "Auto Affordability Index," it now takes 23.6 weeks of America's median family income to afford a new car. That's 2.8 weeks less than it took at the end of 1995.

It's slightly longer than it took in 1980, the second year the index was computed, according to Comerica.

Including finance charges, the average passenger vehicle sold in the third quarter of 2006 cost $26,500. That's about five percent less than the same period a year before.

Meanwhile, the average family income has risen five percent over the same period, according to Comerica.

Improved productivity in the auto industry has combined with intense competitive pressures to drive the cost of a new car downward since its high in 1994, said Dana Johnson, chief economist at Comerica.

"It's a pretty happy story for the consumer," said Johnson.



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thecar - 11/14/2006 12:38:38 PM

+1 Boost

the logic there is strange ...

so ppl buys cheaper cars ,spends less on cars, not cars get cheaper , regards to [ average passenger vehicle sold in the third quarter of 2006 costs five percent less than the same period a year before. ]

Also has to factor in that interest rate has been lowered , if compares to [2.8 weeks less than it took at the end of 1995. ]

Agent009 - 11/14/2006 12:51:05 PM

+1 Boost

It also may be an indicator that less expensive cars do a better job of filling the needs of most buyers. So the avg buyer may be spend proportionally less today.

2JZSoarer - 11/14/2006 11:54:23 PM

0 Boost

No way,cars are more expensive now than ever,but it's gotten easier to finance one now than before!!!

99gs400 - 11/15/2006 11:41:03 AM

+1 Boost

U think people are making more money now than ever so the preception on new car is cheaper ?

XYZZ - 11/16/2006 5:58:55 AM

+1 Boost

SOME people are making more. but the middle class continues to shrink.

cars ARE more expensive, but the financing (and rebates) make it EASIER to get a new car, IF you qualify at all for financing.