Over the past 11 months, used and electric vehicle affordability improved following years of sharp price increases, according to iSeeCars.com. While used vehicle costs declined by 5.4% and household income climbed by 3.7% since October 2022, there has been a significant increase in interest rates. The price of EVs decreased even further, with new EVs falling by 10% and used EVs falling by over 20%. The end effect is increased affordability for used cars and electric vehicles overall.
Conversely, new cars have seen continual price hikes, with the effect compounded by high interest rates. The iSeeCars Affordability Index for new cars declined 6.8% last year due to these factors.
iSeeCars analyzed the affordability of three-year-old used vehicles over the past 12 months. Used EV affordability made the biggest jump over the past year, with average prices going from $46,020 to $37,040, a 19.5% drop.
iSeeCars determined the pricing of a used car with an Affordability Index value of 100 throughout October 2022 and September 2023 by utilizing data on loan rates and household income. By September 2023, there were 158 low-cost used cars instead of the 137 that existed in October 2022 based on the affordability pricing requirements.
The Mercedes-Benz CLA and the Ford Explorer were the only two used cars that increased in price last year. Still, these vehicles were offset by 23 models that became affordable over the past 11 months, for a net gain of 21 more affordable cars in September 2023 compared to October 2022.