With market dynamics leading to record prices and at least a two-decade-low for incentives, new-vehicle affordability declined again in October. October’s affordability decline was worsened by a decline in median income, which is a product of fading government support. The number of median weeks of income needed to purchase the average new vehicle in October increased to 42.4 weeks from an upwardly revised 40.9 weeks in September.
Cox Automotive/Moody’s Analytics Vehicle Affordability Index
Every factor moved against affordability in October. The price paid moved higher to a new record eclipsing $46,000. Incentives declined as well. Rates also moved slightly higher. Estimated median incomes in October declined 0.6%. With record-high prices, low incentives, and slightly higher rates, the estimated typical monthly payment increased to a new record high at $680, which was up 19.8% year over year.
With the decline in October, new vehicle affordability was much worse than a year ago when prices were lower and incentives were much higher. Affordability in October was worse than at any month covered by the index data, which dates to January 2012.
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 December 15, 2021.
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.