Everything just keeps getting more and more expensive, right? Well, maybe. Sure, the price of eggs might be in the stratosphere, healthcare costs seemingly never stop growing, and even gasoline has been increasing in recent weeks, but not every price tag keeps surging upward at such an uncomfortable rate. Last month, for instance, the affordability of new vehicles was the best it’s been in quite some time.
Good News For Consumers
According to a report from Cox Automotive and Moody’s Analytics Vehicle Affordability Index, the affordability of new vehicles in March was the best it’s been in 45 months, that’s close to four years. Compared to the same month in 2024, the average new vehicle required 36.7 weeks of median income to afford, down around 4.5 percent from 38.4 weeks a year ago.
“In 2025, we have seen improvements in affordability each month,” explained Jonathan Smoke, chief economist at Cox Automotive in a media release published by the organization. “In March,” he continued, “the average price of a new vehicle decreased once again. This decrease, combined with higher incomes and slightly lower interest rates, more than offset a reduction in incentives. However, the real test will come in April, when tariffs are likely to have more of an impact on the economy and the auto market.”
Lower prices are great news for consumers, but modestly falling prices in early 2025 could be something of a calm before the storm. As Smoke mentioned, prices could shoot up in the coming months if the Trump administration’s tariffs are implemented.
When it comes to loans, Cox Automotive notes that the average rate increased by 4 basis points in March, hitting 10.14 percent. That upward movement seems troubling, but still, the year-over-year figure is 45 basis points lower. Additionally, Kelley Blue Book, a Cox Automotive subsidiary, reports that the average new vehicle transaction price dropped by 0.2 percent last month.
Matching that figure, the typical vehicle payment also fell by 0.2 percent last month, hitting a mere $739. That’s a year-over-year decrease of 1.3 percent.
New Vehicle Pricing Is Always Hugely Important
“Affordability is a key consideration for consumers when vehicle shopping and has been steadily improving over the last several years,” said Smoke. Still, even if prices are modestly falling, the average new vehicle transaction price is still around $48,000, which is unbearable for many drivers.
As Kelley Blue Book reported for March, only 26 new vehicle models had an average transaction price of less than $30,000, and those products “are highly vulnerable to the new tariff policy adopted by the White House.” Additionally, new electric vehicles are prohibitively expensive for many motorists. The average transaction price for a factory-fresh EV last month was more than $59,000.
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