New-vehicle affordability was essentially unchanged in July, according to the latest Cox Automotive/Moody’s Analytics Vehicle Affordability Index. Strong income growth and steady rates helped offset a modest increase in new-vehicle prices.
Income growth remained strong at 4% year over year. At the same time, the estimated average auto loan rate was unchanged in July at 9.52%1, which was 2 basis points higher year over year. The average new-vehicle price increased 0.2% for the month to $49,855, according to Kelley Blue Book’s July average transaction price report.
Cox Automotive/Moody’s Analytics Vehicle Affordability Index
Weeks of Income Needed to Purchase a New Light Vehicle
The typical monthly payment increased 0.7% month over month to $768, which was up 2.9% year over year and well below the December 2022 peak of $795. The number of weeks of median income needed to purchase the average new vehicle was essentially unchanged at 35.4 weeks, compared with 35.3 weeks in June.
New-vehicle affordability was better than a year ago in July, as higher incomes more than offset a 1.9% increase in new-vehicle prices and slightly higher interest rates. Incentives were 2.4% lower than a year ago. New-vehicle affordability improved by 1.5% compared to a year ago, when it took 35.8 weeks of median income to purchase the average new vehicle.
Click here for the full methodology for the Cox Automotive/Moody’s Analytics Vehicle Affordability Index. Follow the link to review the full series of Vehicle Affordability Index reports.
The next update of the Cox Automotive/Moody’s Analytics Vehicle Affordability Index will be published on Sept. 17.
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.
