New cars are now more difficult to afford than ever. The average new car buyer signed up for a monthly payment of $762 last month.
High prices and interest rates drive the skyrocketing numbers. The average new car sold for $48,681 in November — an all-time high. Meanwhile, the Federal Reserve just enacted its sixth interest rate hike this year, pushing auto loan rates to a 2-decade high.
Recent Fed moves, combined with a shortage of new cars, have triggered a feedback loop pushing new car prices ever higher.
The Cox Automotive/Moody’s Analytics Vehicle Affordability Index measures how long it takes the average earner to pay off the average car. It hit another record high last month — Americans now work 43.3 straight weeks to pay for their vehicles. That’s 7% longer than one year ago.
Despite the trends, car shoppers remain resilient. Cox Automotive Chief Economist Jonathan Smoke explains, “As we entered December, the latest data show consumers’ views of buying conditions for vehicles improved and is at the second-best reading since March. Though auto credit access tightened sharply in November, and now we see vehicle affordability decline again, consumers remain resilient.”
Cox Automotive is Kelley Blue Book’s parent company.
