On the dash:
- Affordability improved for the fifth straight month, driven by income growth, steady pricing and higher incentives.
- Median income gains reduced the weeks needed to buy a new vehicle to 35.1, the lowest in nearly four years.
- Higher ownership costs, including insurance, maintenance and fuel, continue to pressure overall affordability.
New-vehicle affordability improved for the fifth straight month in March as rising incomes, stable pricing and rates, along with higher dealer incentives lifted consumer purchasing power. That’s according to the latest Cox Automotive Moody’s Analytics Vehicle Affordability Index.
The study found the gains were primarily driven by a 3.9% year-over-year increase in household income, along with stable pricing and interest rates and rising dealer incentives. The average transaction price (ATP) for a new vehicle in March was $49,275. That is down 0.1% from February but 3.5% higher than the same period a year earlier. Dealer incentives also rose 5.5% year over year.
Interest rates also played a role. The average new-vehicle loan rate was 9.50% in March, down one basis point from the previous month but up 16 basis points compared to March 2025.
The average monthly payment for a new vehicle fell to $752 in March, a 0.5% decrease from February. However, buyers are paying about $21 more per month compared to a year earlier.
Further supporting consumers, median household income rose 3.9% year over year, which reduced the median number of weeks of income needed to purchase a new vehicle to 35.1 weeks, down from 35.4 weeks in February and the lowest level in nearly four years.
Despite steady gains in new-vehicle affordability, higher ownership costs continue to weigh on consumers. Higher gas prices, along with rising insurance, maintenance, and repair costs, continue to erode affordability gains. New-vehicle prices are roughly 15% higher than in 2021. Insurance costs have risen by nearly 60% over the same period, while maintenance and service costs are up about 40%.
