According to the latest Cox Automotive/Moody’s Analytics Vehicle Affordability Index data, new vehicle affordability declined slightly in November. Despite factors that should increase affordability, such as lower average interest rates, higher incentives, and increased median incomes, they couldn’t fully absorb the impact of rising prices. However, despite the challenges, new vehicles are still more affordable and accessible than a year ago.
Cox Automotive’s Chief Economist, Jonathan Smoke, notes that the new-vehicle affordability decline is minimal and is better than last year. According to the data, there was a marginal decline of less than 1% in comparison to October. The data revealed a year-over-year improvement of 5% despite the slight dip, driven by intensified consumer demand.
The average auto loan rate declined by nine basis points to 10.44%, marking the lowest average rate in 15 months. Despite the lower interest rates, the average new-vehicle price increased by 1.5% in November. However, higher incentives offered by automakers and an average income growth of 3.6% year-over-year have partially offset the impact of price increases.
While the average monthly payment has risen by 1.0%, landing at $756, it’s still below the peak of December 2022 when the typical monthly payment was $795. The median weeks of income needed to purchase an average new vehicle increased slightly to 37.9 weeks, up from 37.6 weeks in October.
Despite the challenges and the slight decline in affordability, new vehicles remain largely reasonable compared to a year ago.
