U.S. new-vehicle affordability showed signs of improvement in March, even as broader economic pressures continued to weigh on consumers, according to the latest Auto Market Weekly Summary from Cox Automotive for the United States.
Stronger household income, increased incentives and slightly lower vehicle prices contributed to improved buying power. The number of weeks of income required to purchase a new vehicle fell to 35.1, down from 35.4 in both February and the same month last year.
At the same time, financing costs edged higher. The average auto loan rate reached 9.70 per cent in March, up 29 basis points year over year, while the typical monthly payment declined slightly to $752.
“For consumers and dealers, the macro picture remains a study in competing forces,” the report read.
Retail sales posted a strong monthly gain, rising 1.7 per cent in March — the largest increase in decades. However, much of that growth was driven by a 15.5 per cent surge in gasoline station receipts, reflecting higher fuel prices rather than increased discretionary spending.
Motor vehicle and parts dealers recorded a modest 0.5 per cent increase month over month but remained down 2.1 per cent compared with a year earlier.
Consumer sentiment continues to trend lower. The University of Michigan index fell to 49.8 in April, dropping below levels seen during peak inflation in 2022, as concerns about rising prices and economic uncertainty persist.
The report also noted that tax refunds are still supporting spending, but elevated gas prices are absorbing much of that benefit, limiting the impact on discretionary purchases such as vehicles.
