Data Point
New-Vehicle Affordability Improved in May
Monday June 17, 2024
Article Highlights
- New-vehicle affordability declined in April, reversing some of the improvement in March.
- The number of median weeks of income needed to purchase the average new vehicle increased to 37.7 weeks.
- The typical payment increased by 1.8% to $762.
New-vehicle affordability improved in May, more than reversing April’s setback, according to the Cox Automotive/Moody’s Analytics Vehicle Affordability Index.
“The improvement in affordability was a result of improving incentives, lower interest rates and ongoing income growth,” said Cox Automotive Chief Economist Jonathan Smoke.
The estimated average auto loan rate declined in May by 22 basis points (BPs) to 9.98%1 , which was the lowest average rate in 11 months. Income growth continued as well resulting in 3.7% improvement year over year.
COX AUTOMOTIVE/MOODY’S ANALYTICS VEHICLE AFFORDABILITY INDEX
MAY 2024
Weeks of Income Needed to Purchase a New Light Vehicle
The typical payment declined 1.0% to $752, and the number of median weeks of income needed to purchase the average new vehicle declined to 37.1 weeks from a downwardly revised 37.6 weeks in April. The average monthly payment peaked at $795 in December 2022.
New-vehicle affordability in May 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 May was down 6.2% 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 July 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 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.