Data Point
New-Vehicle Affordability Declines Again in June, Typical Monthly Payment Hits Record $730
Friday July 15, 2022
Article Highlights
- New-vehicle affordability worsened again in May, with increases in interest rates and vehicle prices outpacing income growth.
- The number of median weeks of income needed to purchase the average new vehicle increased for the fourth consecutive month reaching 41.3 weeks in May from an upwardly revised 40.8 weeks in April.
- The estimated number of weeks of median income needed to purchase the average new vehicle in May was up 19% from last year.
New-vehicle affordability declined again in June with increases in rates and prices reaching a new record, 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 June increased to 42.2 weeks from an upwardly revised 41.5 weeks in May.
Supporting affordability, median income grew 0.3%, but all other factors moved against affordability. The price paid moved 1.6% higher to a new record. Incentives declined to a new low. The average interest rate increased another 8 basis points. As a result of these moves, the estimated typical monthly payment increased 2.2% to $730, which was a new record high.
Cox Automotive/Moody’s Analytics Vehicle Affordability Index
June 2022
Weeks of Income Needed to Purchase a New Light Vehicle
New-vehicle affordability in June was much worse than a year ago when prices were lower and incentives were higher. The estimated number of weeks of median income needed to purchase the average new vehicle in June was up 17% from last year.
“While tracking new-vehicle prices and median household income is informative to provide a broad look at relative new-vehicle affordability over time, it is important to remember that our metrics are built on national averages,” notes Jonathan Smoke, chief economist at Cox Automotive. “The truth is, new vehicles are mostly purchased by households with well-above average income, and many of these high-earning buyers are able to secure below-average interest rates. With this group, vehicle availability and low inventory is a bigger hurdle than vehicle prices.”
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 Aug. 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.