Data Point
New-Vehicle Affordability Declines to Record Low in July
Monday August 16, 2021
Article Highlights
- With market dynamics leading to record prices and a nine-year low in incentives, new-vehicle affordability declined this spring and has hit record lows in each of the last two months.
- The number of median weeks of income needed to purchase the average new vehicle in July increased to 37.4 weeks from an upwardly revised 37.2 weeks in June.
- Affordability in July was worse than at any month covered by the index data, which dates to January 2012.
With market dynamics leading to record prices and a nine-year low in incentives, new-vehicle affordability declined this spring and has hit record lows in each of the last two months. Without improving incomes and favorable interest rates, the decline in affordability would have been even worse July. The number of median weeks of income needed to purchase the average new vehicle in July increased to 37.4 weeks from an upwardly revised 37.2 weeks in June.
Cox Automotive/Moody’s Analytics Vehicle Affordabity Index
The factors that drive affordability moved in different directions in July. The price paid moved higher and incentives declined, but estimated median incomes increased and the average financing rate declined slightly. Even with rates slightly lower, the estimated typical monthly payment increased to a record high.
With the decline in July, new-vehicle affordability was much worse than a year ago when prices were lower and incentives were much higher. Affordability in July was worse than at any month covered by the index data, which dates to January 2012.
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 September 15, 2021.
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 company. 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.