While everything else seems to be getting more expensive, new vehicles became slightly more affordable in May. This is due to lower transaction prices, higher incentives, and strong income growth, offsetting a slight increase in interest rates.
The data reported here comes from the Cox Automotive/Moody’s Analytics Vehicle Affordability Index. It calculates how long the average earner would need to work to pay off the average new car. The number of median weeks of income needed to purchase the average new vehicle fell to 34.9 weeks from 35.2 weeks in April.
Cox Automotive is the parent company of Kelley Blue Book. The full methodology for this report can be viewed here.
Price Drop
Last month, the average vehicle price decreased 0.5% to $49,220. This caused the monthly payment to also dip to $753.
More Incentives
New vehicle affordability is better than a year ago, despite prices being 1.2% higher. This is because interest rates are lower, incomes are higher, and incentives are 5.5% higher than in May 2025. All this is good news for those in the market for a new car.
