The affordability of new vehicles improved in July, according to Cox Automotive/Moody’s Analytics Vehicle Affordability Index.
Much of this growth has been credited to growth in income as well as lower prices and higher incentives, offsetting slightly higher rates.
This is affirmed by data from Kelley Blue Book, which showed median income grew 0.3% while the average new-vehicle transaction price declined 0.7%.
The Analytics Vehicle Affordability Index found that the number of median weeks of income needed to purchase a new vehicle decreased to 42.3 weeks in July, which is slightly higher than July 2022’s number of 42.2 weeks.
This July’s number is a decrease from June 2023, which showed 42.8 weeks of income needed for a new vehicle purchase.
The typical new-vehicle loan interest rate also increased by 2 points to 9.65%, resulting in the estimated typical monthly payment declining by 0.9% to $762.
“After entering the year with affordability at an all-time low, we are finally seeing some improvement, which should allow some consumers who were priced out of the market to jump back in,” said Cox Automotive Chief Economist Jonathan Smoke.
