The average transaction price for a new-vehicle went up $300 to $26,300 in the second quarter, despite stagnant incomes across the country. The cause though is not rising costs of vehicles, claims Comerica Bank in a study they conducted, but via consumer decisions to purchase higher priced vehicles.
“While consumers opted to buy more expensive vehicles last quarter, a sharp drop in financing costs held down our affordability index,” said Dana Johnson, Chief Economist at Comerica Bank. “Reflecting the partial normalization of credit markets, the average rate paid on a car loan at finance companies was only 3.45 percent last quarter, the lowest level seen in five years. In the current quarter, our affordability index very possibly will reach a new best reflecting the cash-for-clunkers program that is now in place.”
The affordability index is expected to return to normal however, as the second-quarter spike is largely attributed to the cash-for-clunkers program, and the fact that financing costs are at the lowest they’ve been in five years.
-By: Stephen Calogera
Source: Comercia Bank (via AutoBlog)