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New Car Affordability Declined In September As Rates Increase

With automotive production suffering greatly due to various supply chain issues over the past couple of years, both used and new vehicle prices have skyrocketed to new record highs with each passing month. The new vehicle market cooled slightly in September, with Ford average transaction prices declining two percent while Lincoln’s ATP rose two percent, but a solid percentage of new Ford ownersincluding, specifically, Ford F-150 owners, along with Lincoln owners, are still shelling out over $1,000 a month for their vehicles. Thus, it doesn’t come as a big surprise that new car affordability as a whole declined in September as interest rates continued to rise, according to new data from Cox Automotive.

Auto loan rates reached a 15-year high last month, which mitigated any effect that declining prices may have had on new car affordability. This means that the number of median weeks of income needed to purchase the average new vehicle in September increased to 42.2 weeks from 42.1 weeks in August

While the average transaction price of new vehicles for the entire market declined 0.3 percent to $48,094 from a record high in August and median income rose 0.4 percent, interest rates increased by 23 basis points, while incentives also fell to a new 20-year low. As such, the estimated average monthly payment for a new vehicle increased by 0.7 percent to $738, which is a new record high.

New car affordability continues to suffer because of these market conditions, particularly when compared to the same month last year, when interest rates and prices were lower, and incentives were higher. Last month, the estimated number of weeks of median income needed to purchase the average new vehicle increased nine percent compared to last year, in fact.

We’ll have more insights like this to share soon, so be sure and subscribe to Ford Authority for the latest Ford F-Series newsFord F-150 news, and non-stop Ford news coverage.

Brett's lost track of all the Fords he's owned over the years and how much he's spent modifying them, but his current money pits include an S550 Mustang and 13th gen F-150.

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Comments

  1. John M.Stecz

    It’s a shame that the car dealerships are adding thousands of dollars to the window sticker of new vehicles,or gouging the public. That’s why I bought a 2016 Dodge Challenger Hellcat because Dodge was selling the car for the window sticker price

    Reply
  2. John M.Stecz

    Thank you

    Reply
  3. hot toddy

    Ford has boxed themselves in with a rising interest rate environment on one side and increased unit cost on the other. Add in a very good posibility of a recession in 2023 and you may see more unsold units on dealers lots. That means lower but probably not much more affordable prices for consumers if there are any left that qualify for loans by then.

    Reply
  4. Ron

    Just wait until mid 2023, dealers will be almost giving them away.

    Reply
    1. EcoBoost29579

      Sure hope so. So many potential buyers like me are just watching all these fools buying at outrageous prices.
      I just don’t understand why the economy hasn’t yet crashed. It’s WAY overdue.

      Reply

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