Affordability for New Vehicles Rises Again in July on Lower Prices, Higher Incomes and Incentives

July marked the second consecutive month of improved new‑vehicle affordability after the dip that followed the tariff announcements, according to the Cox Automotive and Moody’s Analytics Vehicle Affordability Index.

“In July, new-vehicle affordability improved to the best level since March, when tariffs were first announced,” said Cox Automotive Chief Economist Jonathan Smoke. “Higher incentives, higher incomes and lower prices combined for improving affordability conditions.”

The estimated average auto loan rate was unchanged in July at 9.63%, which was lower year over year by 108 basis points. The average vehicle price decreased 0.1% for the month. Income growth remained strong at 3.4% year over year.

COX AUTOMOTIVE/MOODY’S ANALYTICS VEHICLE AFFORDABILITY INDEX
July 2025

Weeks of Income Needed to Purchase a New Light Vehicle

The typical payment decreased 0.4% to $748, which was down 1.7% year over year and to the lowest monthly payment since March. The number of median weeks of income needed to purchase the average new vehicle declined to 36.8 weeks from 37.0 weeks in June. The average monthly payment peaked at $795 in December 2022.

New-vehicle affordability in July was better than a year ago, when it took 38.6 weeks of median income to purchase the average new vehicle, which was 4.7% higher. A year ago, prices were 1.5% lower, but interest rates were higher. Incomes and incentives were also lower in July 2024.

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, 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.