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Study Shows Auto Affordability Slips at Year-End

14 February 2000

    DETROIT -- The purchase of an average-priced new vehicle during the fourth 
quarter of 1999 required 23.8 weeks of median family income, before taxes, 
according to the Auto Affordability Index compiled by Detroit-based Comerica Bank.  
This compares with 23.5 weeks of income required for purchase in the third 
quarter.  During the same quarter a year earlier, a new vehicle purchase took 24.7 
weeks of income, Comerica reported.

    The average vehicle price in the fourth quarter was $21,420, up 0.8
percent from the year-earlier price.

    "In each of the past four years, vehicle affordability has suffered a
seasonal setback during the fourth quarter," said David L. Littmann, chief
economist at Comerica.  "The problem during the fourth quarter was that
although both median family income and average auto prices increased 1.8
percent from the prior quarter, average financing rates jumped half of one
percentage point, the steepest rise since the third quarter of 1996."

    "Nonetheless, cars and light trucks in 1999 were at their most affordable
level in 19 years," Littmann continued.  "The average 23.6 weeks of income
required to buy a vehicle last year rivaled the average 23.5 weeks recorded in
1980," he said.

    Comerica's Auto Affordability Index is compiled from Commerce Department
and Federal Reserve data.