Vehicle Affordability Index Improves Year Over Year

Takeaway: New-vehicle affordability in America is influenced by a complex interplay of economic factors, including interest rates, vehicle prices, incentives and income growth. In 2024, according to the Cox Automotive/Moody’s Analytics Vehicle Affordability Index, trends in new-vehicle affordability showed both improvements and declines throughout the year. New-vehicle prices started the year trending lower year over year, but shifted higher in the fourth quarter. Auto loan rates improved at the end of the year, and wage growth continued throughout. As the year progressed, consumers experienced both improvements and setbacks, highlighting the dynamic nature of the automotive market, and vehicle affordability ended the year about where it started.

What’s next: The Cox Automotive/Moody’s Analytics Vehicle Affordability Index shows that new-vehicle affordability improved year-over-year at the start of 2025, reaching its best level in 41 months. Lower vehicle prices and higher incomes have offset reduced incentives and slightly higher interest rates. While future prices and rates may rise by the end of 2025, a stabilized labor market and wage growth will support better affordability, credit access and loan performance.