New-car affordability drops to lowest point so far this year

New-vehicle affordability hit a 2025 low in April, just one month after posting its best level in nearly four years.

The findings: Affordability in the new car market—measured by the weeks of income needed to purchase a new light vehicle—slid sharply to 37.3 weeks in April, according to Cox Automotive/Moody’s Analytics Vehicle Affordability Index.

• It’s better than last year’s 39.1-week mark, but that gain’s mostly smoke and mirrors—driven by steeper rates and weaker incomes in 2024, not real price relief.

In fact: New-vehicle transaction prices averaged $48,699 in April, up 1.1% vs 2024 and 2.5% vs March. 

• The average monthly payment was down 1.6% compared to last year, but jumped 3% from March to $753 in April, making it the highest since December. 

• Incentives slipped to 6.7% of average transaction prices in April, down from 7.0% in March, as OEMs tightened the taps on discounts.

• And April’s affordability reading (weeks of income needed) was a full week worse than March, which marked the strongest level in 45 months.

So what changed?

That said, even though the April reading wasn’t a big surprise (her words), she noted that it could be a glimpse of what’s to come.

As we know: Tariffs have been the usual suspect in pricing conversations for months.

But as Keating put it, the market is showing “more positive signals around tariff policy resolution,” which could help ease pricing pressure and uncertainty heading into Q3.

Some of the “positive signals” we’ve covered:

• Most Mexican auto parts exporters will avoid new U.S. tariffs

• U.S. and China agree to 90-day pause on most tariffs

• President Trump prepares slight relief on auto tariffs—with strings attached

Looking ahead: Keating expects OEMs to maintain production discipline over the next few months—but sees a return of incentives by the back half of the year to keep sales momentum going. 

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