New-Vehicle Affordability Improved to Best in Two Years

New-vehicle affordability improved slightly month over month and was again better year over year, according to the Cox Automotive/Moody’s Analytics Vehicle Affordability Index.

“Trends in new-vehicle affordability factors mainly moved in favor of consumers in November to the best level of affordability in more than two years,” said Cox Automotive Chief Economist Jonathan Smoke. “Income growth again more than offset the impact of higher prices while incentives grew and auto loan rates edged down.”

The typical payment declined by 0.1% in November, and the number of median weeks of income needed to purchase the average new vehicle declined to 38.5 weeks from 38.6 weeks in October. At 38.5, it was lower than the 40.6 weeks recorded last November and the lowest number of weeks since September 2021.

COX AUTOMOTIVE/MOODY’S ANALYTICS VEHICLE AFFORDABILITY INDEX
NOVEMBER 2023

Weeks of Income Needed to Purchase a New Light Vehicle

Vehicle Affordability Improves Year Over Year

Median income grew by 0.3%, the Kelley Blue Book average new-vehicle transaction price increased by 0.6%, and incentives from manufacturers rose. The typical new-vehicle loan interest rate declined to 10.33%¹ from a peak of 10.55% in October. As a result of these changes, the estimated typical monthly payment declined 0.1% to $766 from $767 in October. The average monthly payment peaked at $796 in December 2022.

New-vehicle affordability in November was better than a year ago when prices were higher, but interest rates were lower. The estimated number of weeks of median income needed to purchase the average new vehicle in November was down 5.2% 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 Jan. 16, 2024.

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 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.