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New-Vehicle Purchase Affordability Steady

June conditions balanced between high prices, interest rates and rising income and incentives.

July 14, 2023
New-Vehicle Purchase Affordability Steady

Median income growth of 0.3% and automaker incentive increases improved affordability, despite higher prices.

IMAGE: Pexels/Jesse Zheng

1 min to read


Affordability around new-vehicle purchases was flat in June, Cox Automotive reports.

It said robust income growth balanced high prices and interest rates during the month. The number of median weeks of income needed to buy the average new model held steady at 43, with May and June being the lowest levels since October.

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“We came into this year with affordability at an all-time low due to record prices, interest rates approaching 20-year highs, and tighter credit conditions,” Cox Automotive Chief Economist Jonathan Smoke said. “At mid-year, I believe we can definitively say at least things did not get worse.”

Median income growth of 0.3% and automaker incentive increases improved affordability, despite higher prices, Cox said. The average new-vehicle transaction price rose at the same rate as median income, and the estimated average monthly payment increased 0.2% to $771, just a dollar above May’s and down from the $795 peak in December.

“… we could indeed see consumer auto loan rates improve even if the Fed has a move or two left,” Smoke said. “So, I think we have threaded that needle. If we see more supply bring more discounting and incentives in the new-vehicle market and used cars are depreciating, it means affordability won’t get worse from here.”

LEARN MORE: Credit Access, Consumer Confidence Up

Originally posted on Auto Dealer Today

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