New Vehicles Have Become Less Affordable: Study

by Matthew Guy

Published: January 19th, 2023

new vehicles have become less affordable study

According to the Sherlocks at Cox Automotive, Americans saw new-vehicle affordability decline in December and reached a new low for the 2022 calendar year.

And, in other news, the sky is blue and water is wet.

In all seriousness, an analytic report released this week shows just how far out of reach a new car is getting for some buyers in this country. While median income apparently grew just 0.4 percent, the average price paid for a new vehicle increased by 1.9 percent, rocketing up to $49,507.

This is where the ‘affordability calculator’ comes into play. Cox and Co say they use data from multiple government and industry sources as a unique indicator to calculate the number of weeks of median household income needed to purchase an average new vehicle. This time around, that figure reached a high of 44 weeks, up from 43.3 in November. It crossed the 40-week threshold about a year ago and hasn’t looked back. In late 2019, for example, it was roughly 32 weeks.

The study also put a number on loan rates, which Cox says reached a new 20-year high during the last twelve months. Interest rate hikes, combined with the higher car prices have brought the estimated typical monthly payment up by 2.1 percent to $777, says Cox. Those are decidedly not lucky sevens. It’s one thing for the average price of a new rig to climb into the stratosphere but it’s quite another for those numbers to be compounded by loan terms which compound the problem and make the paper even more unaffordable.

This builds on our report from the other day in which we learned a record number of customers have signed themselves up for four-figure monthly payments. According to Edmunds, 15.7 percent of new vehicle customers in the fourth quarter of 2022 signed up for the privilege of sending a lender $1,000 or more per month for their new car. This, despite the average down payment climbing to a record $6,780 in Q4 of last year.

[Image: Vitpho/Shutterstock]

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Matthew Guy

Matthew buys, sells, fixes, & races cars. As a human index of auto & auction knowledge, he is fond of making money and offering loud opinions.

More by Matthew Guy

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9 of 49 comments

CKNSLS Sierra SLT on Jan 20, 2023

I don't care how a Nissan Versa is equipped it's no comparison to my F150-I can well afford.

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- See 3 previous
- Jeff S on Jan 20, 2023
  
  If you can afford an F-150 and like it then you chose the right vehicle for you.
  
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- Master Baiter on Jan 20, 2023
  
  An unladen F-150 rides like a buckboard. I'm glad you like yours, but it's not my cup of tea.
  
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- DenverMike on Jan 20, 2023
  
  What about the cost to your soul? Yeah I wince at the gas pump but like most, there’s things on the other end that I don’t mind doing without.
  
  This is ‘Merica by the way. Let’s talk about Mc Mansions..
  Most later model pickups owners hauling air to the office job or mall clearly aren’t ballers. And midsizer pickups aren’t any better (at saving).
  I’m guessing there’s a lot of weekend recreation involved, or DIY, flea markets, etc, some of which can’t be done or done easily in a Camry and such.
  Most importantly, things can happen or get done at the drop of a hat. Just a turnkey away. Haters and BMW drivers can eat it.
  
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- Lou_BC on Jan 20, 2023
  
  "An unladen F-150 rides like a buckboard."
  Since when?
  My SuperCrew rode very nice empty. 500 lb in the box did make it stellar.
  
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DenverMike on Jan 20, 2023

“If you can afford an F-150 and like it…”

Sure but if you’re still driving it 20 years later and beyond, not bored with it and even enjoy it, with or without custom upgrades and mods, isn’t it a great “investment”?

Old pickups are always in fashion, yeah depending on the truck. Also they’re built to commercial standards no matter how equipped. New, used and resto/custom parts are everywhere and cheap, plus everyone can work on them.

15 MPG average sounds good to me.

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- Jeff S on Jan 20, 2023
  
  It is a free country drive what you like. This article is about new vehicles becoming less affordable. Getting into debt to buy an expensive full size crew cab pickup especially if you are drowning in debt is not a sound financial decision. This is not to say that pickups are bad because they have more utility than many vehicles and if you can afford a new or used truck without breaking the bank and want one then that shouldn't be a problem. This is the same thing that Dave Ramsey talks about on his podcasts for example when a caller called in with a loan on a new 70k 4x4 crew cab pickup when their annual income is 50k. Dave told the caller to sell the truck and buy something used that they could pay cash for. Nothing wrong with driving an old pickup or any old vehicle that still runs and is reliable especially if it is paid for.
  What about McMansions? See above for comments about pickups. If you have the money buy a McMansion if you want but if you buy one and cannot afford furniture and the utilities then you have no business buying one. I didn't have a McMansion but I had a large house in a nice neighborhood for just my wife and I. I was able to sell it for a nice profit and downsize. The funny thing was the couple that bought my home were retired with no children but they did pay cash. Again it was their business and they could afford my home and afford to keep it maintained. I didn't sell my house because I couldn't afford it I sold it to downsize and didn't want to maintain a large house anymore. I choose to downsize my truck and my home as a lifestyle change to simplify my life which was a personal choice. I don't want to tell others what to do but if you cannot afford something don't buy it buy something you can afford.
  
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- DenverMike on Jan 20, 2023
  
  I surely can't judge based on his income. Even if the truck payments are 35% of his income, he could be debt free, lives simple, or whatever the case. It's likely worth giving up other luxuries.
  Either way it's best to buy the best or hardest loaded truck you can afford, especially if you feel you'll likely get bored with a base or lower trim truck in a short time. Crew cab 4X4s with the V8 start at $50K with crank windows and vinyl everywhere. I recommend an STX or XLT. I like simple (new) and add what I consider "luxury" later. The infotainment and Bose/Fender/etc stereos are a waste.
  Spread out over 20 or 25 years of (enthusiast) ownership, it's a fairly cheap way to go. What's a new Camry worth 20+ years later? Never mind the damage to your soul.
  
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- Lou_BC on Jan 21, 2023
  
  If you get a new F150 Supercrew, base trim is XLT. That would have "power everything". You'd have to buy a regular cab F150 to get crank windows. I am not sure what comes with the extended cab.
  
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- Jeff S on Jan 21, 2023
  
  I don't disagree. If you buy a vehicle that you really don't like you are less likely to keep it but at the same time don't buy more vehicle than you can afford. I bought the XLT Maverick because I didn't like the black interior with no cruise control and no intermitten wipers in the XL. I didn't want the Lariat because it had vinyl seats or now what they call vegan leather. I like the navy and gray cloth interior and the blue trim that the XLT has better than the interior of the XL or Lariat. I bought the trim level in the middle which checked most of the boxes of what I wanted and that I could live with happily for years and yes spread out over 10 or 20 years the price is insignificant and its exactly what I wanted. I added the factory spray in bed, floor trays, and the full size spare and I bought and installed front and back mudflaps and side window deflectors from the Ford accessory website. I got everything I wanted and if I want to add additional things in the future I can always order those from the Ford accessory website and install them myself. I have been averaging 40 to 50 mpgs in my hybrid Maverick which was another reason for me choosing a hybrid over a turbo 4 which I didn't need AWD since my wife's CRV has it and I seldom used the 4 wheel drive in my 2008 Isuzu crew cab. I didn't need or want a large or midsize truck but I still wanted an open bed albeit a little smaller than I would have preferred but the bed is very flexible and can haul more than you would think it could. I am very happy with the Maverick and it is perfect for me.
  
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Bike Rather have a union negotiating my pay rises with inflation at the moment.
Bike Poor Redapple won't be sitting down for a while after opening that can of Whiparse