- New car prices are on the way down.
- A return of discounts will make your dealer visit more painless.
- Affordability has been an acute problem for EVs.
If you've been waiting to buy a new car until prices start to fall, your patience over the last few years might be paying off.
Average affordability for new cars is finally heading in the right direction for shoppers, according to new data from Cox Automotive. February notched the best new vehicle affordability in over a year as prices and interest rates fell and average income grew, the study found.
Shoppers paid an average of $47,244 for a new car in February, down 2.2% from the same month a year ago and down nearly 6% from peak new-car prices in December 2022, according to Kelley Blue Book.
This is good news for car shoppers who have been waiting out a yearslong supply crunch in the car market that sent prices soaring.
And a return of purchase incentives — which had gone all but extinct after pandemic-induced production stoppages and a prolonged chip shortage left dealer lots empty — is finally helping to offset higher interest rates.
New-vehicle incentives accounted for nearly 6% of vehicle purchase prices in February, significantly higher than the 3.1% ratio recorded the same month a year ago, also according to Kelley Blue Book.
Taking all of these factors into account, Cox Automotive (which owns Kelley Blue Book) found that the weeks of median income required to buy a new car in February declined to 37.1 weeks from 37.4 weeks in January.
While this month-to-month decline is modest, it's far off a peak from about a year ago when shoppers needed more than 40 weeks of median income to buy a new car.
Vehicle affordability issues first started bubbling up in the EV market last year. Electric cars were some of the first to start piling up on dealer lots, leading to an uptick in deals.
This has led several car companies to reassess their vehicle lineups and offer more discounts on expensive models.