New cars grew less affordable in April. That broke a five-month streak in which new vehicles had grown easier to buy.
The Cox Automotive/Moody’s Analytics Vehicle Affordability Index measures the ability of a household earning the median income to afford the purchase of an average-priced automobile. Updated monthly using the latest data from multiple government and industry sources, this unique indicator calculates the number of weeks of median household income needed to purchase an average new vehicle. Cox Automotive is the parent company of Kelley Blue Book.
In April, the median weeks of income needed to purchase a new vehicle increased to 33.8 weeks, up from 32.4 weeks in March.
New car prices have been rising for months. In April, the average financing rate also slightly increased. That pushed monthly payments higher. Median incomes decreased in April, in part because federal economic stimulus payments had boosted them in February and March.
Manufacturers also cut the incentives they offered buyers last month. “As a result,” Cox Automotive says, “all components of new vehicle affordability shifted against consumers in April.”
Affordability is now worse than in February of 2020 when the COVID-19 pandemic began to impact the U.S. economy.
