- New cars grew harder for the average buyer to afford in October — the third straight month they’ve gotten more expensive
- New car prices actually fell, but other factors erased that gain
For the third straight month, it grew harder for the average American to afford a new car last month.
We measure affordability as a function of time. Few Americans can buy a new car with cash. Most of us borrow to buy, and work to pay off the loan.
So the Cox Automotive/Moody’s Analytics Vehicle Affordability Index measures how long the average earner would need to work to pay off the average new car. Kelley Blue Book’s parent company, Cox Automotive, publishes the index.
Related: Is Now the Time to Buy, Sell, or Trade-In a Car?
For most of a decade, it hovered between 33 and 36 weeks, until the COVID-19 pandemic sent it soaring. It reached a high of 44 weeks in December 2022.
Today, it sits at 36.4 weeks.
The price of the average new car declined in October after briefly surpassing the $50,000 mark. But automakers and dealers pulled back on incentives, canceling out the improvement. Modest income growth wasn’t enough to offset that factor.
The typical monthly payment for a new vehicle increased 0.4% to $766, up 1.2% year-over-year and reaching the highest level in 16 months. Other pressures on Americans’ wallets, including spiking energy prices, are also making it harder to afford the higher payments.
