Cox Automotive’s and Moody’s Analytics data reveal that income growth is offsetting rising vehicle costs.
On the Dash:
- New-vehicle affordability remained stable in August despite higher prices and monthly payments.
- Consumers required fewer weeks of income to buy a new vehicle compared with last year due to stronger wages and lower interest rates.
- Rising monthly payments may increase buyer sensitivity to pricing and financing options.
New-vehicle affordability remained stable in August as higher prices and declining incentives were counterbalanced by strong income growth, according to the latest Cox Automotive/Moody’s Analytics Vehicle Affordability Index.
The average new-vehicle price rose 0.5% during the month, reaching the highest level so far in 2025. At the same time, the typical monthly payment increased 0.6% to $752, also a peak for this year. However, steady income growth of 3.4% year-over-year helped offset the financial strain, keeping affordability unchanged from July.
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On average, consumers needed 36.8 weeks of median income to purchase a new vehicle in August, the same as the previous month. This compares favorably to August 2024, when it required 38.1 weeks of income. The improvement year-over-year reflects stronger wages, lower interest rates, and higher incentives compared with last year.
The estimated average auto loan rate in August stood at 9.64%, up slightly from July by one basis point but down more than one percentage point compared with a year earlier. While monthly payments reached a 2025 high, they remain below the record $795 peak set in December 2022.
Cox Automotive’s analysis noted that affordability in August was stronger than last year despite today’s higher vehicle prices. In August 2024, average prices were 2.6% lower; however, buyers faced higher interest rates and weaker income growth, which reduced their overall purchasing power.
The report highlights how income gains continue to play a critical role in sustaining demand for new vehicles. Even with record-high prices and minimal incentives, wage growth has prevented a decline in affordability levels.
These findings suggest that consumer buying power remains relatively stable despite market pressures. However, with monthly payments reaching new highs in 2025, dealers may continue to face sensitivity from buyers toward pricing and financing options.
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