New-vehicle affordability declined again in December, following similar dynamics each month this fall and winter including another new record on average price paid and another low for incentives, Cox Automotive reported Jan. 14.
December’s affordability decline was again caused by most vehicle market factors moving against affordability while median income was static. The number of median weeks of income needed to purchase the average new vehicle in December increased to 43.2 weeks from a downwardly revised 42.1 weeks in November.
The price paid moved higher to a new record average price of $47,077. Incentives declined to at least a 20-year low. The interest rate was the only factor that helped affordability in December as the average rate declined to the lowest level for the pandemic. With continued price inflation and declining incentives, the lower rate wasn’t enough to prevent monthly payments from rising. The estimated typical monthly payment increased to a new record high at $688, which was up 19.7% year-over-year.
With the decline in December, new vehicle affordability was much worse than a year ago when prices were lower and incentives were higher. Affordability in December was worse than at any month covered by the index data, which dates to January 2012.