On the Dash:
- New-vehicle affordability fell to its lowest point since December 2024.
- The average new-vehicle price hit a record $50,080 despite higher incentives.
- Monthly payments rose to $766, the highest in over a year.
New-vehicle affordability in September fell to its lowest level since December 2024, as record-high prices outpaced rising incentives and income growth, according to the latest Cox Automotive/Moody’s Analytics Vehicle Affordability Index.
The report found that the average transaction price for a new vehicle reached an all-time high of $50,080 in September, a 2.1% increase from the previous month, according to Kelley Blue Book. Although manufacturers boosted incentive spending to the highest level of 2025 and household incomes grew 3.4% year over year, those gains were not enough to offset price increases.
Loan costs offered little relief, with the average auto loan rate holding steady at 9.63%, just one basis point lower than August and nearly a full percentage point lower than a year ago. As a result, the typical monthly payment climbed to $766, marking a 15-month high and up 1.2% year over year. The average payment now requires 37.4 weeks of median income to afford, compared to 36.8 weeks in August.
While affordability weakened month over month, it improved 2% from the same time last year, when higher interest rates and lower incomes made new vehicles harder to purchase. In September 2024, the average new-vehicle price was 3.7% lower, but borrowing costs and fewer incentives offset that advantage.
The latest data highlights a persistent imbalance between vehicle prices and household income. Despite slowing inflation and stronger wage growth, new-vehicle costs continue to climb, driven by consumer preference for higher-priced SUVs and trucks, limited inventory of lower-cost models, and elevated financing costs.
As the market enters the final quarter of 2025, affordability remains a central concern for dealers and automakers, shaping incentive strategies and inventory planning ahead of next year’s sales cycle.
