The average vehicle price neared a record at $50,562, according to Kelley Blue Book’s September report, but overall vehicle affordability has improved in the past year, primarily due to wage increases.
Driving the news: The Cox Automotive/Moody’s Analytics Vehicle Affordability Index found vehicle affordability improved by 2.5% compared to September 2025.
Jonathan Gregory, senior director for economic and industry insights, noted to CDG News that the affordability index is driven by transaction price, buyer’s income, amount financed, and interest rate, with the output being the number of weeks of median household income needed to buy the new average vehicle.
Additionally, Gregory pointed out that ownership costs such as gas, insurance, registration, sales tax, and trade-in equity are not in the equation.
Zooming in: Income grew by 3.8% in the past year, leading to the median weeks of income needed to purchase a new vehicle improving to 35.7 weeks in September versus 36.5 weeks in September 2025.
The average price of $50,562 was just under the record high price of $50,614 set in December 2025.
The average auto loan rate was 9.45%, which was 9 basis points below last year.
The average payment increased by 1.3% to $776 in the past year, reaching a high point since December 2023 and only $19 less than the record in December 2022.
Incentives decrease: Incentives being offered by OEMs dropped by 8.8% in the past year.
In dollar value, the incentives fell from $3,682 to $3,359.
There were slight movements in incentives in August, with a 2.6% increase.
“Though incentives are up compared to last month, they are down from a year ago,” Gregory said. “Ultimately, the price buyers finance is up about 1.4% from last year, but income growth more than covered it.”
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Bottom line: Heading into the last two months of the year, affordability has improved slightly, but there is still some stress on consumers with payments increasing along with the other driving expenses.
“Rates are turning into a headwind as they will continue to push prices up,” Gregory said. “If we hold everything at the current September levels, each 25 basis points adds roughly $5 to the payment and about 0.25 weeks to the index.”
With rates being higher, dealers shouldn’t expect incentives to offset those costs for consumers.
“Rate buy downs and year-end support would show up directly in affordability,” Gregory added. “The problem right now with incentives is [that, with] the elevated rates, it is very expensive to buy down rates right now.”
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