March 2025 marked the best new-vehicle affordability level in 45 months, according to the Cox Automotive/Moody’s Analytics Vehicle Affordability Index. While affordability has remained a persistent pain point for consumers and dealers, it’s been consistently improving in 2025.
The average price for a new vehicle fell by 0.2% in March. The average auto loan interest rate rose to 10.14%, an increase of 4 basis points (BPs) from February. However, it is still down 45 BPs year-over-year. Consumer income growth rose 3.4% year-over-year, helping to offset high vehicle costs.
The average monthly auto payment declined 0.2% to $739 in March, which is down 1.3% year-over-year. This is a significant difference from December 2022, when the average monthly payment peaked at $795.
A critical metric for measuring affordability is the number of weeks of median income required to purchase the average new vehicle. In March, it required an average of 36.7 weeks of median income to purchase a new vehicle, down from the revised 36.9 weeks in February. This is a 4.5% improvement year-over-year, whereas at the same time a year ago, it required 38.4 weeks of median income.
Cox Automotive Chief Economist Jonathan Smoke notes that affordability has improved due to falling vehicle prices, rising incomes, and an easing of interest rates. However, April could be a turning point as the new auto tariffs may impact the economy and the auto market.
While March’s data reflects a positive trend, the long-term implications of the tariffs remain to be seen. If automakers face higher production costs, it will likely lead to price hikes, reduced incentives, and a shrinking of new-vehicle affordability.
