xcel
11-11-2006, 04:44 PM
Consumers have seen vehicle prices drop 5% over a year, while family income has risen by 5%. (http://www.detroitnews.com/apps/pbcs.dll/article?AID=/20061111/AUTO01/611110395/1148)
Sharon Terlep - The Detroit News - Nov. 11, 2006
http://www.cleanmpg.com/photos/data/501/Auto_affodibility.jpgCheap financing and heavy rebates on cars and trucks have made new vehicles more affordable for American families than at any time since 1980, according to Comerica Bank's most recent auto affordability index.
Driving away in a new car required an average of 23.6 weeks of income for a family making $58,000 a year, the median in the third quarter of 2006. That's nearly three weeks fewer than five years ago and 7.3 weeks less than in late 1994.
In the past year, the average price consumers pay for a light car or truck, including finance charges, dropped 5 percent to $26,500. At the same time, median family income rose about 5 percent.
The increasing affordability of automobiles is one bright side to the economic blows dealt by foreign automakers, Comerica Bank Chief Economist Dana Johnson said.
"It's an example that foreign competition tends to limit the pricing power of domestic producers. A lot of people don't necessarily see how they benefit from that competition - they only see the pain."
Automakers have had to hold down prices or raise them only slightly to offset competition. While U.S. automakers are making massive production cuts, they're still stuck with too many unsold vehicles.
That means automakers aren't able to charge much more for vehicles, even as statistics show their products are more reliable than ever. And it means many consumers are able to swing payments on larger or better-equipped models or afford a new vehicle for the first time.
The numbers show what dealers have been seeing in showrooms.
"We commonly will see a customer walk in with a bill of sale from the mid 1980s, and it's within a couple thousand dollars of what they're in today," said Dana Tidwell, sales manager at John Rogan Buick-Livonia.
Matthew Brady was stunned when he recently went to trade in his Chevrolet Trailblazer for a newer model of the same vehicle. He planned on another Trailblazer, but learned he could get a 2007 Chevrolet Impala fully equipped with OnStar services and other features, for $66 month less than what he was paying.
"I was just going to get another Trailblazer and he pulled this out," said Brady, 56, of Southfield. "It has every conceivable bell and whistle. It seems like prices are going in descending order."
Across the country, the increasing affordability of cars is evident in the increasingly plush vehicles younger people are driving, said consultant Terry Koeckritz, who lives about 60 miles outside of Reno, Nev.
"You see them driving these things down the street and wonder how they can afford it," said Koeckritz, who follows vehicle trends on the Edmunds.com online forum.
He recently traded in a Ford Explorer for Subaru Forrester, which he estimates costs about $10,000 less than what he was driving.
"People say things are expensive," he said. "But then look what they're driving."
Sharon Terlep - The Detroit News - Nov. 11, 2006
http://www.cleanmpg.com/photos/data/501/Auto_affodibility.jpgCheap financing and heavy rebates on cars and trucks have made new vehicles more affordable for American families than at any time since 1980, according to Comerica Bank's most recent auto affordability index.
Driving away in a new car required an average of 23.6 weeks of income for a family making $58,000 a year, the median in the third quarter of 2006. That's nearly three weeks fewer than five years ago and 7.3 weeks less than in late 1994.
In the past year, the average price consumers pay for a light car or truck, including finance charges, dropped 5 percent to $26,500. At the same time, median family income rose about 5 percent.
The increasing affordability of automobiles is one bright side to the economic blows dealt by foreign automakers, Comerica Bank Chief Economist Dana Johnson said.
"It's an example that foreign competition tends to limit the pricing power of domestic producers. A lot of people don't necessarily see how they benefit from that competition - they only see the pain."
Automakers have had to hold down prices or raise them only slightly to offset competition. While U.S. automakers are making massive production cuts, they're still stuck with too many unsold vehicles.
That means automakers aren't able to charge much more for vehicles, even as statistics show their products are more reliable than ever. And it means many consumers are able to swing payments on larger or better-equipped models or afford a new vehicle for the first time.
The numbers show what dealers have been seeing in showrooms.
"We commonly will see a customer walk in with a bill of sale from the mid 1980s, and it's within a couple thousand dollars of what they're in today," said Dana Tidwell, sales manager at John Rogan Buick-Livonia.
Matthew Brady was stunned when he recently went to trade in his Chevrolet Trailblazer for a newer model of the same vehicle. He planned on another Trailblazer, but learned he could get a 2007 Chevrolet Impala fully equipped with OnStar services and other features, for $66 month less than what he was paying.
"I was just going to get another Trailblazer and he pulled this out," said Brady, 56, of Southfield. "It has every conceivable bell and whistle. It seems like prices are going in descending order."
Across the country, the increasing affordability of cars is evident in the increasingly plush vehicles younger people are driving, said consultant Terry Koeckritz, who lives about 60 miles outside of Reno, Nev.
"You see them driving these things down the street and wonder how they can afford it," said Koeckritz, who follows vehicle trends on the Edmunds.com online forum.
He recently traded in a Ford Explorer for Subaru Forrester, which he estimates costs about $10,000 less than what he was driving.
"People say things are expensive," he said. "But then look what they're driving."