Vehicle Affordability Improves Again in February

Affordability improved in February, as represented by median weeks of income needed to purchase a new vehicle declined to 31.7 weeks from 32.5 weeks in January. The Cox Automotive/Moody’s Analytics Vehicle Affordability Index continues to show that new vehicles have become relatively more affordable since October 2020, when the affordability index reached 35.3 weeks, the high point for the calendar year 2020.

In February, the price paid was modestly lower, which helped lower the monthly payment. Most importantly, median incomes were boosted by the December/January stimulus package which included $600 payments and enhanced unemployment benefits. The latest $1.9 trillion support package extends the unemployment benefits through September and will send $1,400 payments to many Americans. Incentives and interest rates moved against affordability in February.

With the strong income support, affordability remains better than it was in February 2020 before the pandemic began. Affordability was strongest in May 2020 when incomes were supported, prices were lower, and incentives were higher. The year-over-year change is due to higher incomes and lower rates, but prices are higher now, incentives are down, and rates are starting to move higher as well.

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, 2021.

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.