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Auto Affordability Still Improving, Comerica Bank Index Shows

14 August 1997

Auto Affordability Still Improving, Comerica Bank Index Shows

    DETROIT, Aug. 14 -- The purchase of an average-priced new
vehicle during the second quarter of 1997 required 26.2 weeks of median family
income, before taxes, according to the Auto Affordability Index compiled by
Comerica Bank.
    This compares with 26.3 weeks of income needed to purchase a new vehicle
in the first quarter of the year.  In the second quarter a year ago, outlays
on the average new vehicle absorbed 26.1 weeks of family income.
    "Auto affordability last quarter improved chiefly on the strength of
rising family income," said David L. Littmann, senior economist with Comerica.
"Between the first and second quarters, incomes rose 1.2 percent, compared
with total vehicle cost increases of 0.8 percent."
    Comerica's Auto Affordability Index would have shown more improvement in
the second quarter were it not for the increased amount of financing
associated with average new car purchases, Littmann noted.  "Higher financing
rates and smaller down payments contributed to greater overall financing
costs, and the Federal Reserve raised rates at the end of the first quarter."
    Comerica's Auto Affordability Index is compiled from Commerce Department
and Federal Reserve data.  Graphic detail is available upon request.

SOURCE  Comerica Bank