On the Dash:
- The average new-vehicle price rose 0.5% in August to $50,090, putting renewed pressure on affordability.
- The typical payment reached $770, up 0.5% monthly and 2.6% year over year.
- Affordability remained 1.2% better than a year ago, with buyers needing 35.5 weeks of median income to purchase a new vehicle.
According to the latest Cox Automotive/Moody’s Analytics Vehicle Affordability Index, new-vehicle affordability experienced a slight decline in August. Per Kelley Blue Book, the average price of a new vehicle rose by 0.5% during the month, reaching $50,090. While income growth improved by 0.3% from July, the estimated average auto loan rate decreased by 2 basis points to 9.49%. Unfortunately, these gains were insufficient to offset the increase in vehicle prices.
The typical monthly payment for a new vehicle rose 0.5% in August to $770, up 2.6% from last year. Despite this rise, the average payment remains below the peak of $795 recorded in December 2022. However, dealers are still operating in a market where monthly payments are a key consideration for prospective buyers.
Specifically, the median number of weeks of income required to purchase the average new vehicle rose to 35.5 weeks, which is slightly higher than July’s 35.4 weeks. This modest increase also indicates ongoing pressure from rising vehicle prices, even as income and financing conditions improve.
In terms of year-over-year affordability, new-vehicle affordability was 1.2% better than it was a year ago. In August 2025, buyers needed 35.9 weeks of median income to purchase the average vehicle. While vehicle prices were 1.9% higher than the previous year, nearly stable interest rates and higher incomes helped offset some of that rise. Additionally, incentives offered were 7.3% lower than a year ago, which limited another potential source of affordability relief.
What dealers should watch
Nonetheless, August’s data illustrates that lower interest rates alone may not significantly enhance affordability if transaction prices continue to rise. The interplay between vehicle pricing, financing costs, income growth, and incentives will continue to influence buyers’ purchasing power. It’s important to note that Cox Automotive and Moody’s Analytics will release the next update of the Vehicle Affordability Index on October 15.
