New Vehicle Affordability Improves in January as Prices Fall 2.2%
Cox Automotive and Moody’s Analytics report new-vehicle affordability hit a 41-month high in January. Average prices decreased by 2.2% to kick off 2025 following strong year-end sales, according to the latest data from Cox’s Kelley Blue Book division.
The average monthly payment for a financed new vehicle transaction fell to $755, 1.7% less than January 2024 and well below the most recent highwater mark of $795 in December 2022.
Analysts noted the New Vehicle Affordability Index, which calculates the number of median weeks of income required to cover the average cost of a new vehicle sold in the U.S., is down to 37.7, aided by year-over-year average income growth of 3.6%.
“New-vehicle affordability received a boost from the lower prices typically observed in January following the luxury brand sales surge in December,” Cox’s chief economist, Jonathan Smoke, writes in the report. “These lower prices, combined with higher incomes, more than offset lower incentives and a slight increase in interest rates during January.”
