February New-Vehicle Affordability Best in 31 Months

Trends in new-vehicle affordability factors moved in a positive direction in February, leading to the best affordability in 31 months (since July 2021), according to the Cox Automotive/Moody’s Analytics Vehicle Affordability Index.

“New-vehicle affordability improved in the consumer’s favor again last month,” said Cox Automotive Chief Economist Jonathan Smoke. “Income growth continued and both the average new-vehicle price and the average interest rate declined.”

The typical payment decreased 0.7% in February, and the number of median weeks of income needed to purchase the average new vehicle declined to 37.1 weeks from a downwardly revised 37.4 weeks in January.

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

Weeks of Income Needed to Purchase a New Light Vehicle

Consumers Benefit from Improved Affordability in February

Median income grew 0.3%, the Kelley Blue Book average new-vehicle transaction price declined 0.1%, and incentives from manufacturers increased. The typical new-vehicle loan interest rate declined to 10.15%¹ from 10.28% in January. As a result of these changes, the estimated typical monthly payment declined 0.7% to $744 from $749 in January. The average monthly payment peaked at $795 in December 2022.

New-vehicle affordability in February 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 February was down 6.9% 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 April 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.