New-Vehicle Affordability Stalls at 2025 Low in May

New-vehicle affordability remained steady in May at the worst level this year, according to the Cox Automotive/Moody’s Analytics Vehicle Affordability Index.

“The U.S. economy remains fundamentally strong, but the recent tariffs have had a swift and measurable impact on vehicle affordability,” said Cox Automotive Chief Economist Jonathan Smoke. “After reaching the lowest affordability point of the year in April, the market essentially flatlined at that level in May. The forces that typically drive improvement – like incentives and income growth – have been neutralized by stubbornly high interest rates and stagnant prices. Without meaningful gains in wages and further easing of rates, we’re likely to see affordability limit demand as we move into the summer months.”

The estimated average auto loan rate increased in May by 9 basis points to 9.88%¹, which was lower year over year by 77 basis points. According to Kelley Blue Book, the average new-vehicle price was statistically unchanged for the month. Income growth remained relatively strong at 3.4% year over year. Higher incentives and higher incomes helped to mitigate the impact of higher interest rates on new auto loans.

In May, the average payment increased 0.2% to $756, marking the highest monthly payment since December, despite a 1.1% decline year over year. The number of median weeks of income needed to purchase the average new vehicle remained steady at 37.4 weeks, unchanged from the upwardly revised 37.4 weeks in April. The average monthly payment peaked at $795 in December 2022.

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

Weeks of Income Needed to Purchase a New Light Vehicle

New-vehicle affordability in May was better than a year ago, when it took 39.0 weeks of median income to purchase the average new vehicle, which was 4.2% higher. A year ago, prices were 1.0% lower, but interest rates were higher. Incomes and incentives were also lower in May 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 July 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.