New-Vehicle Affordability Improves in October

New-vehicle affordability improved in October as interest rates declined, incentives increased, and income gains all favored the consumer, according to the Cox Automotive/Moody’s Analytics Vehicle Affordability Index. October had the best vehicle affordability level since August 2021.

“Auto loan rates are beginning to decline, offering some relief to consumers,” said Cox Automotive Chief Economist Jonathan Smoke. “In October, we also observed an improvement in auto credit availability. Although new-vehicle prices remain stubbornly high, these improvements in auto credit, along with increased incentives from automakers, are driving new-vehicle sales as we approach the end of the year.”

COX AUTOMOTIVE/MOODY’S ANALYTICS VEHICLE AFFORDABILITY INDEX
October 2024

Weeks of Income Needed to Purchase a New Light Vehicle

The estimated average auto loan rate declined in October by 31 basis points to 10.20%¹, the lowest average rate in 15 months. However, the average new-vehicle price increased by 0.2% for the month. Countering the price increase were higher incentives and income growth, which was up 3.5% year over year.

The typical monthly payment in October declined 1.5% to $743. The average monthly payment peaked at $795 in December 2022. The number of median weeks of income needed to purchase the average new vehicle declined to 37.4 weeks from an upwardly revised 38.0 weeks in September. In October, new-vehicle affordability improved from last year when it took 40.7 weeks of median income to buy an average new vehicle.

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 Dec. 15, 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 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.

Jonathan Smoke

Chief Economist

Jonathan Smoke leads Cox Automotive’s economic and industry insights team, which tracks key metrics and trends impacting both the wholesale and retail markets for vehicles informed by the proprietary data from the company’s businesses and platforms. For 28 years, Smoke has focused on translating data and trends into relevant actionable insights for the industries that represent the biggest purchases that consumers make in their lifetimes: real estate and automotive. Smoke joined Cox Automotive in 2017.