March Sees Best New-Vehicle Affordability in 45 Months, But Tariffs Loom Large

New-vehicle affordability improved in March and reached the best level in 45 months, according to the Cox Automotive/Moody’s Analytics Vehicle Affordability Index.

“Affordability is a key consideration for consumers when vehicle shopping and has been steadily improving over the last several years,” said Jonathan Smoke, chief economist at Cox Automotive. “In 2025, we have seen improvements in affordability each month. In March, the average price of a new vehicle decreased once again. This decrease, combined with higher incomes and slightly lower interest rates, more than offset a reduction in incentives. However, the real test will come in April, when tariffs are likely to have more of an impact on the economy and the auto market.”

The estimated average auto loan rate rose by 4 basis points to 10.14%¹ in March, which was lower year over year by 45 basis points. According to Kelley Blue Book, the average price of new vehicles decreased by 0.2% for the month. Income growth, which increased by 3.4% year over year, further supported affordability.

In March, the typical payment declined by 0.2% to $739, which was down 1.3% year over year. The number of median weeks of income needed to purchase the average new vehicle declined to 36.7 weeks from the downwardly revised 36.9 weeks in February. The average monthly payment had previously peaked at $795 in December 2022.

COX AUTOMOTIVE/MOODY’S ANALYTICS VEHICLE AFFORDABILITY INDEX
MARCH 2025

Weeks of Income Needed to Purchase a New Light Vehicle

New-vehicle affordability in March was better than a year ago when it took 38.4 weeks of median income to buy an average new vehicle, which was 4.5% higher. A year ago, prices were 0.3% lower, but interest rates were higher. Incomes and incentives were also lower in March 2024.

Click here for the full methodology for the Cox Automotive/Moody’s Analytics Vehicle Affordability Index.

The next update of the Cox Automotive/Moody’s Analytics Vehicle Affordability Index will be published on May 15, 2025.

¹ The index input of the average interest rate paid by consumers is calculated to reflect a 72-month, fixed-rate loan. For the latest Dealertrack estimated, volume-weighted average new loan rate, visit the Auto Market Snapshot.

The Cox Automotive/Moody’s Analytics Vehicle Affordability Index (VAI) is updated monthly using the latest data from government and industry sources, including key pricing data from Kelley Blue Book, a Cox Automotive brand. This important industry measure will be released at mid-month to indicate if the prices paid for new vehicles are moving out of consumers’ financial reach or becoming more affordable over time.