New-Car Affordability Improves but Consumer Action Required to Expand Buyer Access, Says Requisite Press

LOS ANGELES, Sept. 10, 2014 /PRNewswire/ -- Requisite Press, LLC reported today an August 2014 Auto Buyer's Affordability Index (ABAI) of 54.8, indicating that a prudent, median-income household can only afford 54.8 percent of the average new-car price. The ABAI has trended up since April 2014, indicating improving affordability. However, there has been little corresponding increase in the limited number of affordable models, and near-term economic factors are unlikely to help. Informed consumers, on the other hand, can easily expand model selection by preparing for an immediate purchase and requesting best-price quotes from multiple dealers. To increase awareness of this opportunity, Requisite Press has launched the Auto Buyer's Edge, a new consumer-focused YouTube channel for car buyers.

An August median-income buyer could only afford 22 of the 262 new car models priced less than $35,000*—about 1 in 12. This is up from 18 models in April 2014. The increase is due to rising household incomes, flat new-car prices, and low interest rates. However, while analysts expect incomes to continue increasing in the months ahead, it is also likely that prices and interest rates will increase. A growing economy is simply not enough to expand buyer access.

"The good news is that informed consumers can enjoy a much greater selection without taking on long-term loans or waiting for lower list prices," said Phil Kelton (@Phil_Kelton), president of Requisite Press. "Prepared buyers that directly request best-price quotes from multiple dealers can easily expand their selection of affordable models—all without the hassle of negotiation."

Transaction prices for the same model can vary widely from buyer to buyer. It's not unusual to see price variations of 10%, 15%, or even 20%, simply based on buyer information, methods, and dealership selection. A difference of this magnitude has a major impact on buyer access. A price reduction of 15%, more than doubles the selection of affordable models to 47, including some of the best-selling, top-rated models. However, the majority of new-car buyers remain unaware of this opportunity.

To increase consumer awareness, Requisite Press has launched the Auto Buyer's Edge YouTube channel. The debut video, titled The Key to Great New-Car Prices without the Negotiation Hassle, introduces consumers to the power of the commodity effect.

The Auto Buyer's Edge YouTube channel is at: https://www.youtube.com/user/autobuyersedge

The August ABAI of 54.8 is based on a median household income of $54,045, an average light-vehicle transaction price of $29,670, and adherence to the 20-4-10 auto financing rule. This equates to an affordable monthly payment of $320 and price of $16,255.

The monthly ABAI was developed to enable buyers to easily view current new-car prices in the context of sound financial advice. The 20-4-10 auto financing rule consists of a minimum 20 percent down payment, a maximum 4-year loan term, and monthly payments of no more than 10 percent of gross household income. The rule is widely recommended by personal finance experts to maintain financial security, avoid excessive interest costs, and preserve future investment opportunities.

For additional information:

http://www.requisitepress.com/ABAI

*Based on 2014 MSRP.

About Requisite Press, LLC:

Requisite Press, LLC was founded in 2012 to publish select expert information with great potential for consumer quality-of-life improvement. The debut project was the application of commodity-buying principles to new-car buying, resulting in the book Power Shift: The New No-Stress, No-Hassle Way to Get the Best New-Car Deal—Every Time! Power Shift enables individual consumers to minimize new-car prices while obtaining an improved car-buying experience.

Contact:

Phil Kelton
@Phil_Kelton
Email
310-896-2302

SOURCE Requisite Press, LLC