New vehicle affordability hits all-time low in June, monthly payments spike to $730 — Cox Automotive

New vehicle affordability hit a record low as the average monthly payment for new cars increased to $730, according to new data from Cox Automotive. Labor and parts shortages have forced many automakers to increase new vehicle prices. For the fourth consecutive month, the median number of weeks of income required to buy a typical new car grew from 41.3 weeks in May to 40.8 weeks in April. Used vehicles are also expensive and in limited supply.

Some experts have noted that only those making well above the median in the United States have the power and the funds to purchase new vehicles. Even with median income growth of 0.3%, new car prices are still too expensive and increased well above the income growth. The price for a new vehicle shifted 1.6% higher than in May. July is still not done, but economists believe that steep increases are expected in both prices and monthly payments.

Jonathan Smoke, Chief Economist at Cox Automotive, noted that only high-income earners who can score a low-interest rate are buying new vehicles. Compared to last year, new vehicle prices are up 17%, with no telling when they will decrease again and become affordable for medium-income earners.