NOTE: RIGHT TIME TO BUY…MORE THAN JUST A SLOGAN TO HELP DEALERS. PEOPLE THAT HESITATE DURING THIS PERIOD MAY REGRET IT.=DP
New cars become more affordable with lower price and new incentives
Alisa Priddle / The Detroit News
The average family may have less income, but that does not put a new car out of reach as vehicle prices fell even more sharply during the first quarter, according to Comerica Bank’s Auto Affordability Index.
It took 21.5 weeks of median family income to buy a $26,000 new car or truck, said Dana Johnson, Comerica’s chief economist, which is 1.3 weeks less than it was during the fourth quarter of 2008 when the cost of an average-priced vehicle was $1,700 higher.
It is the lowest since the index was started in 1979, Johnson said.
“It should be no surprise that cars are very affordable now,” Johnson said. “With weak demand, there are a lot of incentives,” he said, both in discounts and lower interest rates on car loans. Additionally, the credit market is loosening up.
The median family income in Michigan with two wage-earners in the house is $53,575, according to the U.S. Census Bureau.
Johnson said there has been a longtime trend of automakers being slow to increase the price of new cars and the sticker prices have not increased as fast as incomes have.
The economist expects vehicles to set a new record of affordability during the second quarter as Detroit’s Big Three in particular increase incentives to try to claw back lost market share.
Chrysler LLC announced new incentives this week of as much as $6,000 on a new vehicle in a bid to sustain sales while it restructures under bankruptcy protection.
Detroit’s automakers offered an average of $3,412 in incentives per vehicle in April, according to Autodata Corp. The industry average incentives offered in April were $2,931 per vehicle.