New Vehicle Affordability Improves for the First Time in 6 Months
Washington DC February 16, 2023; The AIADA newsletter reported that in January, the Cox Automotive/Analytics Moody’s Car Affordability Index showed an improvement for the first time in six months in new vehicle affordability. Auto loan rates hitting a new 20-year high presents some difficulties, but they are compensated for by falling new vehicle prices, rising incentives, and rising wages. CBT News reports, the median number of weeks of income required to buy the typical new car in January fell from an upwardly revised 44.7 weeks in December to 44.0 weeks. The rise in manufacturer incentives, a 0.6 percent gain in median income, and a 0.6 percent decrease in the average new-vehicle transaction price from December all contributed to affordability. An additional 12 basis points were added, bringing the average interest rate to 9.51 percent. These contradictory actions caused the expected usual monthly payment to decrease 1.0 percent to $780 from a record-breaking, upwardly revised $788 in December. According to Jonathan Smoke, chief economist at Cox Automotive, “even if rates creep up, the dynamics hint to how affordability might stabilize – or perhaps improve – if we continue to have growth in incentives, moderating costs, and growing earnings.” Click here for the full story.