New-Vehicle Affordability Improves in March

Trends in new-vehicle affordability factors moved in support of consumers again in March, according to the Cox Automotive/Moody’s Analytics Vehicle Affordability Index.

“The positive moves were assisted by the first material decline in interest rates in over two years,” said Cox Automotive Chief Economist Jonathan Smoke. “However, given the move-up in rates so far in April, that decline is likely to be short-lived.”

Along with the decrease in average rate, income growth continued, the average new-vehicle transaction price declined, and incentives increased. The typical payment decreased by 1.2%, and the number of median weeks of income needed to purchase the average new vehicle declined to 36.9 weeks from an upwardly revised 37.5 weeks in February.

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

Weeks of Income Needed to Purchase a New Light Vehicle

Consumers Benefit from Improved Affordability in March

The typical new vehicle loan interest rate declined 15 basis points to 10.47% in March, which was the lowest average since September. The median income grew 0.3%, while the average new-vehicle transaction price declined 0.1%. As a result of these changes, the estimated typical monthly payment decreased by 1.2% to $744 from $753 in February. The average monthly payment peaked at $795 in December 2022.

New-vehicle affordability in March 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 March 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 May 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.