Auto Affordability Worsens, Comerica Reports (from edmonds AutoObserver)
November 11, 2008 By Michelle Krebs
Auto affordability, which has become better and better for consumers in the past couple years, worsened in the third quarter, according to the Auto Affordability Index compiled by Dallas-based Comerica Bank.
The index showed a confluence of factors: family income barely increased in the third quarter, the total cost of buying an average-priced vehicle increased and the credit crunch is taking its toll on affordability.
That cost, which includes financing charges, rose to $28,929, up about $1,200 from the previous quarter. But even excluding finance charges, the new car cost increased 5 percent to 25,200 from the previous quarter.
As a result, it is taking longer to pay for a new vehicle. The purchase of an average-priced new vehicle took 24.1 week of median family income in the third quarter, that's one additional week from the second quarter but still down 1.1 weeks from a year ago.
Comerica Chief Economist Dana Johnson was surprised by the increased cost of a new vehicle.
"In all likelihood, many moderate income buyers pulled out of the market due to the limited availability of financing, thereby temporarily inflating the average amount of money spent on a new car," Johnson said. "A sharp drop in loan-to-value ratios -- to the lowest level in three years -- was another indication that tight auto financing conditions were a restraint for many potential buyers.
What can one say? There are ever more mandates for cars. For instance, any 2008 model car must have a tire-pressure monitoring system.
How much do you think such unfunded mandates raise the cost of cars for working class people? Who's to blame?
Since this is no place for politics, I won't even mention the name of the President who signed the TREAD Act that effective model-year 2008 worsens the affordability of all cars for all working people.
vwW12 - Instead of giving Billions to the Big 3, why couldn't there be a tax rebate for buying a GM, Ford or Chrysler in the amount of the purchase price of the vehicle. The buyer would have to qualify for financing and go through a conventional purchase agreement with the dealer, but on their tax return show the vehicle was purchased NEW and either credit the purchase as an offset to income (deduction) or offer it as a rebate. Make this offer so that only two per family residence every three years could be claimed. Thank God I'm not President, wouldn't that be a mess!
What can one say? There are ever more mandates for cars. For instance, any 2008 model car must have a tire-pressure monitoring system.
How much do you think such unfunded mandates raise the cost of cars for working class people? Who's to blame?
Since this is no place for politics, I won't even mention the name of the President who signed the TREAD Act that effective model-year 2008 worsens the affordability of all cars for all working people.
I would have to agree with you on this one. TPMS shouldn't be mandatory. It usued to be mandatory for you to check your own pressure. I bought those little cap monitors myself. I think its a mixture of many things. You cant blame any one thing. Its poor performance on the us auto makers, its the economy laying off people, the lack of credit, the fact we have to rely on credit. Many factors. And I have to agree that we should not have to bail out the companies. Maybe guarantee the workers that get laid off from these companies get employment elsewhere or re-training. Keep the working class working and all will be well.
vwW12 - Instead of giving Billions to the Big 3, why couldn't there be a tax rebate for buying a GM, Ford or Chrysler in the amount of the purchase price of the vehicle. The buyer would have to qualify for financing and go through a conventional purchase agreement with the dealer, but on their tax return show the vehicle was purchased NEW and either credit the purchase as an offset to income (deduction) or offer it as a rebate. Make this offer so that only two per family residence every three years could be claimed. Thank God I'm not President, wouldn't that be a mess!
This would insure two things: 1) we would not be giving the money to the fat cats with nothing to show ans 2) people would be more willing to buy american. I know I would. But if I cant get the financing what is the point?
vwW12 - Instead of giving Billions to the Big 3, why couldn't there be a tax rebate for buying a GM, Ford or Chrysler in the amount of the purchase price of the vehicle. The buyer would have to qualify for financing and go through a conventional purchase agreement with the dealer, but on their tax return show the vehicle was purchased NEW and either credit the purchase as an offset to income (deduction) or offer it as a rebate. Make this offer so that only two per family residence every three years could be claimed. Thank God I'm not President, wouldn't that be a mess!
I said the same thing in an earlier post, so I'm with you there. I'd even say the money should go toward a non-taxable rebate (otherwise the IRS might view it as taxable "income"). I emailed this suggestion to Speaker Pelosi; it'd be interesting to see what her response will be, if any.
Comparing a Detroit bailout to a financial-system bailout is, quite frankly, stupid. When auto manufacturers go out of business, we lose jobs. When the financial system goes out of business, we lose the economy. If GM fails, Chevy trucks won't simultaneously explode. If AIG (NYSE: AIG) fails, financial markets will simultaneously explode.
But that isn't the point. To justify a bailout, you'd have to make the case that doing so would get the industry back on a sustainable track. There's no logic in bailing out companies if they're simply going to blow through the cash and come back begging for more.
The long downward spiral
Detroit's hemorrhaging, you see, isn't caused by a one-off event that will be contained with a blank check from Uncle Sam. It's driven by factors that have been brewing for decades. Mainly:
Uncompetitive labor and legacy costs.
Reliance on vehicles nobody wants anymore.
I said the same thing in an earlier post, so I'm with you there. I'd even say the money should go toward a non-taxable rebate (otherwise the IRS might view it as taxable "income"). I emailed this suggestion to Speaker Pelosi; it'd be interesting to see what her response will be, if any.
You will get an auto response telling you, in very polite terms, that you dont know what you are talking about. I get them all the time. I read something similar to this article today.
Comparing a Detroit bailout to a financial-system bailout is, quite frankly, stupid.
Perhaps I missed it, but who is comparing the Detroit bailout to the financial system bailout? I went through all the previous posts in this thread and didn't see anyone making such a comparison. So what exactly are you referring to as stupid?
Last edited by Dunerunner; 11-11-2008 at 03:21 PM.
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