New-vehicle affordability declined slightly again in July with increases in interest rates and new-vehicle prices reaching a record high, according to the Cox Automotive/Moody’s Analytics Vehicle Affordability Index. The number of median weeks of income needed to purchase the average new vehicle in July increased to 42.2 weeks from a downwardly revised 42.0 weeks in June.

Supporting affordability, median income grew 0.4% and incentives increased for the first time in 18 months. Most other factors, however, moved against affordability. The average price paid for a new vehicle moved 0.3% higher to a new record of $48,182, according to the latest report of Kelley Blue Book average transaction prices. The average interest rate also moved against affordability, increasing another 19 basis points last month. As a result of these moves, the estimated typical monthly payment increased 0.9% to $733, which was a record high.

Cox Automotive/Moody’s Analytics Vehicle Affordability Index

July 2022

Weeks of Income Needed to Purchase a New Light Vehicle

New-vehicle affordability in July was much worse than a year ago when prices were lower, incentives were higher, and rates were much lower. The estimated number of weeks of median income needed to purchase the average new vehicle in July was up 15% from last year.

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 Sept. 15, 2022.

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.