New cars were just as affordable in March as they were in February. That’s remarkable news after a year in which they steadily grew more difficult to afford.
Affordability isn’t just measured by price. The Cox Automotive/Moody’s Analytics Vehicle Affordability Index measures the number of weeks the average earner would need to work to pay off the average new car. (Cox Automotive is the parent company of Kelley Blue Book.)
The average American would have needed to work 42.9 weeks to pay off the average new car in March.
Car prices fell slightly in March, with the average new car selling for $45,927 – down from a peak of over $47,000 in December.
But other factors worked against buyers. Interest rates increased. Incentives fell. Those combined to raise the average monthly payment to a record $691.
New-vehicle affordability in March was much worse than a year ago, when prices were lower and incentives were higher. The estimated number of weeks of median income needed to purchase the average new vehicle in March was up 18% from last year.
This story originally ran on KBB.com.