Breaking a streak of five straight months of improvement, new-vehicle affordability declined in April, according to Cox Automotive. The number of median weeks of income needed to purchase a new vehicle increased to 33.8 weeks from an upwardly revised 32.4 weeks in March.
In April, the price paid was modestly higher and the average financing rate also slightly increased, so the monthly payment increased. Median incomes softened from higher levels in February and March, which were boosted by the effect of stimulus payments from two different stimulus packages. Incentives also declined in April. As a result, all components of new vehicle affordability shifted against consumers in April.
With the decline in affordability in April, affordability remains worse than a year ago when prices were lower, incentives were higher and Coronavirus Aid, Relief, and Economic Security (CARES) Act payments boosted incomes. Affordability is also now worse than in February 2020 before the pandemic began.
Click here for the full methodology for the Cox Automotive/Moody’s Analytics Vehicle Affordability Index.
The next update of the Cox Automotive/Moody’s Analytics Vehicle Affordability Index will be published on June 15, 2021.