Affordability in the new-vehicle market kept getting better in August, but the United Auto Worker Union strike – given it’s against all three big Detroit brands – could change that, Cox Automotive said Friday.
Buying new has gradually improved all year after the long erosion during the pandemic, when tight inventories pushed up prices to record highs.
Last month, bigger incomes and increased incentives helped consumers better afford still-high prices and high interest rates, Cox said. Prices and the average new-vehicle payment were up, but the weeks of median income needed to buy the average new model fell to 42.1 from 42.2 both in July and a year earlier.
The strike, just as industrywide inventories were moving toward prepandemic levels, could throw a wrench in the affordability balancing act.
“History has shown that an average UAW strike does not disrupt the retail automotive business, but this version may not be ‘average’ given that there’s never been a strike impacting all three major automakers at the same time,” said Cox Chief Economist Jonathan Smoke.
Median incomes increased modestly by 0.3% as the average loan interest rate was flat at its 9.62% peak, said Cox, which estimates that the average monthly new-car payment rose 0.2% to $760; it peaked in December at $795. The average transaction price rose 0.6% to $48,451.
LEARN MORE: New-Vehicle Prices Hold Steady
