Vehicle Affordability Index Improves Year Over Year

Takeaway: New-vehicle affordability closed out the year in much better shape than it started, according to the Cox Automotive/Moody’s Analytics Vehicle Affordability Index. New-vehicle affordability in December was better than a year ago when prices were higher and interest rates were lower. Higher household wages helped offset stubbornly high estimated monthly payments for new-vehicle – which averaged $770 throughout 2023 but ended the year lower. The estimated number of weeks of median income needed to purchase the average new vehicle in December was down 6.7%, or around two and a half weeks, compared to December 2022.

What’s next: Trends in new-vehicle affordability factors moved in support of consumers in the early months of 2024, leading to further improvement year over year, according to the Cox Automotive/Moody’s Analytics Vehicle Affordability Index. So far this year, new-vehicle affordability improved to its best level in 31 months.