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Data Point

December Sees Decline in New-Vehicle Affordability, Monthly Payments Hit Six-Month High

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New-vehicle affordability declined in December, according to the Cox Automotive/Moody’s Analytics Vehicle Affordability Index. Lower interest rates, higher incentives and increased incomes could not offset the impact of higher prices.

“In December, new vehicles were only slightly less affordable than in the previous month,” said Jonathan Smoke, chief economist at Cox Automotive. “The December index increased by 1% from November 2024, aligning with typical seasonal patterns. Higher prices pushed the average monthly payment to a six-month high. However, we expect vehicle affordability to improve in 2025, driven by lower interest rates and increased incentives.”

The estimated average auto loan rate declined in December by 36 basis points to 9.8%1, the lowest average rate in 18 months. However, the average new-vehicle price jumped by 1.5% for the month, according to Kelley Blue Book. Higher incentives and a 3.6% year-over-year income growth somewhat softened the impact of rising prices.

In December, the typical monthly payment rose by 1.4% to $756, the highest level in six months. However, the median weeks of income needed to purchase an average new vehicle increased to 38.2 weeks from a downwardly revised 37.8 weeks in November. The average monthly payment had previously peaked at $795 in December 2022.

COX AUTOMOTIVE/MOODY’S ANALYTICS VEHICLE AFFORDABILITY INDEX
December 2024

New-vehicle affordability in December was better than a year ago when it took 40.6 weeks of median income to buy an average new vehicle, which was 5.9% higher.

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 Feb. 17, 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.

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