Ford Authority

New Vehicle Affordability Improved In May 2024

Anyone that’s been in the market for a new vehicle over the past few years is well aware of the fact that prices have been on the rise for some time now, and have only recently begun to stabilize somewhat. Coupled with soaring interest rates, this has led to a steady rise in monthly payments as well. As a result, new vehicle affordability has reached new record lows at multiple points over the past few years, but thankfully, that trend seems to be reversing course.

Cox Automotive Vehicle Affordability Index May 2024

Cox Automotive previously predicted that new vehicle affordability was bound to improve soon, and now, that prediction has come true, which is certainly good news for all shoppers – especially younger ones. According to the just-released Cox Automotive/Moody’s Analytics Vehicle Affordability Index, the number of weeks of income one needs to purchase a new light-duty vehicle declined in May 2024, hitting 37.1 weeks versus 37.6 in April. The estimated average auto loan rate also declined in May by 22 basis points to 9.98 percent, which was the lowest in 11 months.

Income growth continued as well, resulting in a 3.7 percent improvement year over year, while the typical new vehicle payment dropped by one percent to $752, continuing its downward spiral after peaking at $795 in December 2022. Interestingly, new vehicle affordability last month was better than May 2023, when prices were higher but interest rates were lower, demonstrating the type of impact that factor has on monthly payments in general. Additionally, the estimated number of weeks of median income needed to purchase the average new vehicle in May was down 6.2 percent from last year, due to a number of factors.

2024 Ford F-150 Lightning Flash - Exterior 002 - Side

“The improvement in affordability was a result of improving incentives, lower interest rates, and ongoing income growth,” said Cox Automotive Chief Economist Jonathan Smoke.

We’ll have more on the state of vehicle affordability soon, so be sure and subscribe to Ford Authorityfor comprehensive 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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