- New cars became more affordable for the average buyer in November after three straight months of worsening conditions.
- The change came mostly due to wage growth, not price declines.
It grew slightly easier for the average American to afford a new car in November, reversing three months of worsening buying conditions. However, the improvement came mostly thanks to wage growth, rather than lower car prices.
We measure affordability as a function of time, since few Americans can buy a new car with cash. Most of us borrow to buy, and work to pay off the loan.
The Cox Automotive/Moody’s Analytics Vehicle Affordability Index measures how long the average earner would have to work to pay off the average new car. Kelley Blue Book parent company Cox Automotive publishes the index.
In November, it fell to 36.3 months.
That’s still historically high. The index moved between 32 and 36 weeks for most of a decade before the COVID-19 pandemic disrupted global trade. It peaked at over 44 weeks in December 2022.
New car prices are increasing, nearing the $50,000 mark last month. But incomes have grown 3.5% year-over-year.
The typical buyer in November signed up for a monthly payment of $776, just $19 below its all-time high.
