[InCogKneeToe]

New-Vehicle Affordability Declined to New Low in 2022 - Cox Automotive Inc.

The Cox Automotive/Moody's Analytics Vehicle Affordability Index shows new vehicles are more unaffordable in December.

www.coxautoinc.com

New-vehicle affordability declined again in December and reached a new low in 2022, according to the Cox Automotive/Moody’s Analytics Vehicle Affordability Index released yesterday. Auto loan rates reached a new 20-year high and the average new-vehicle price increased to a record-high $49,507. The number of median weeks of income needed to purchase the average new vehicle in November increased to 44 weeks from 43.3 weeks in November.
COX AUTOMOTIVE/MOODY’S ANALYTICS VEHICLE AFFORDABILITY INDEX

DECEMBER 2022
Weeks of Income Needed to Purchase a New Light Vehicle
Average Monthly Payment for New Car Hits Another Record High
Supporting affordability, median income grew 0.4%, and incentives from manufacturers also increased in December. All other factors moved against affordability. The average price paid for a new vehicle increased by 1.9% to $49,507, according to Kelley Blue Book. The average interest rate increased another 53 basis points. As a result of these moves, the estimated typical monthly payment increased 2.1% to $777, which was a new record.
New-vehicle affordability in December was much worse than a year ago when prices were lower, incentives were higher, and rates were lower. The estimated number of weeks of median income need to purchase the average new vehicle in December was up 7% from last year.

 

[InCogKneeToe]

The number of median weeks of income needed to purchase the average new vehicle in November increased to 44 weeks from 43.3 weeks in November.

As I stated in a previous quote, Household Income doesn't support the Pricing Increases. This Bubble will burst. Especially with the EV Push, and the drastically Over Pricing of EV's

The early 90's Recession, 47 weeks was too long, 44 weeks is getting really close.

 

[AWHoden]

This too shall pass. Not worried.
Not all EV's are overpriced but unfortunately there are only a very precious few which are priced within reach of a vast majority of buyers. I don't think rising car prices can be tied to EV costs. It's a simple matter of supply (not a lot) and demand (rising), which is part of any capitalist system. I also wouldn't say "drastically over priced", early adopters most often like the perceived prestige of "not everyone can afford what I have", welcome to Conspicuous Consumption. For the most part, EV's are priced around the same $45K to $60K range as their ICE friends, unfortunately only the "HEY! Look at me!" expensive ones are getting all the free press these days. The cheaper ones just aren't cool I guess.

I've never paid more than $25K for a car or more than $350 per month, so there must be something wrong with me. I don't feel sorry for people that feel the need to pay upwards of $49K and then whine about it....I'm sure there were less expensive options. This is like listening to people complain about the price of Kristal while the rest of us feel lucky to have a warm bottle of Dasani.

 

[gm4life08]

This too shall pass. Not worried.
Not all EV's are overpriced but unfortunately there are only a very precious few which are priced within reach of a vast majority of buyers. I don't think rising car prices can be tied to EV costs. It's a simple matter of supply (not a lot) and demand (rising), which is part of any capitalist system. I also wouldn't say "drastically over priced", early adopters most often like the perceived prestige of "not everyone can afford what I have", welcome to Conspicuous Consumption. For the most part, EV's are priced around the same $45K to $60K range as their ICE friends, unfortunately only the "HEY! Look at me!" expensive ones are getting all the free press these days. The cheaper ones just aren't cool I guess.

I've never paid more than $25K for a car or more than $350 per month, so there must be something wrong with me. I don't feel sorry for people that feel the need to pay upwards of $49K and then whine about it....I'm sure there were less expensive options. This is like listening to people complain about the price of Kristal while the rest of us feel lucky to have a warm bottle of Dasani.

I agree with much of this. It will all balance out but several desirable EVs are way overpriced compared to ICE counter parts. Look at EV Silverado vs ICE and F150 vs Lightning.

70K for Sierra Denali or Yukon SLT is one thing. But paying 30-40K more allow me to buy an entire other vehicle like a nice Civic to get better fuel economy and still stuff money in the bank. Still rather have two than one.

 

[BlackGTP]

I'd say this metric is telling us something we already know - restricted chip availability with many manufacturers selling mostly higher end vehicles. And we also know that as the supply issue eases the ATP's will decline as production of lower end vehicles resumes.

In other words, no real story.

 

[gm4life08]

I'd say this metric is telling us something we already know - restricted chip availability with many manufacturers selling mostly higher end vehicles. And we also know that as the supply issue eases the ATP's will decline as production of lower end vehicles resumes.

In other words, no real story.

True. All factual and the exact way it will play out. These ridiculous prices for over MSRP are disappearing. And will continue to do so.

 

[InCogKneeToe]

True. All factual and the exact way it will play out. These ridiculous prices for over MSRP are disappearing. And will continue to do so.

But MSRP's have leaped since Covid. in some cases as much a $18,000 from the beginning of 2020

June 26 2020 F150 XLT 4x4 Crew Base $46719 Lariat $59549 CDN
Jan 21 2023 F 150 XLT 4x4 Crew Base $59125 Lariat $77325 CDN Options went up also

 

[Neanderthal]

When your car payment is close to your house payment, Houston, we have a problem.

 

[BlackGTP]

But MSRP's have leaped since Covid. in some cases as much a $18,000 from the beginning of 2020

June 26 2020 F150 XLT 4x4 Crew Base $46719 Lariat $59549 CDN
Jan 21 2023 F 150 XLT 4x4 Crew Base $59125 Lariat $77325 CDN Options went up also

But that goes back to restricted supply - MSRP went up because they could get away with it. We might be going into a global recession as supplier shortages subside - now it depends on what the manufacturers will do. Will they flood the market with cars, and we'll see huge discounts or will they resist temptation to overproduce and keep prices high.

Yesterday I was just whacked with a heating oil delivery and my electric bill - almost $1,400 dollars between the two. I suspect my sad story is being repeated all over the northern hemisphere - that's a lot of pricing pressure for auto makes.

 

[tripowergto Jan2003]

Yesterday I was just whacked with a heating oil delivery and my electric bill - almost $1,400 dollars between the two. I suspect my sad story is being repeated all over the northern hemisphere - that's a lot of pricing pressure for auto makes.

I know that feeling. How much per gallon and per kWh?

 

[BlackGTP]

I know that feeling. How much per gallon and per kWh?

I locked in at $4.48 a gallon when the price of heating oil dropped in November. Just checked and the market rate looks to be $4.29 a gallon for today, so I didn't do too bad with my locked in price. Better than my neighbor that locked in at I think $5.25 a gallon.

My wife squirreled away the electric bill, so I'll go from memory of using about 1,300 kw, which comes out to about $.29 kWh including all of the taxes and transmission charges. Eversource doubled the electric rate as of 1/1.

At least I'm past the worst - my January electric bill is the most expensive of the year and I shouldn't need an oil fill-up until May, and if it stays warm, I may not need one until early fall. Still painful though.

 

[InCogKneeToe]

But that goes back to restricted supply - MSRP went up because they could get away with it. We might be going into a global recession as supplier shortages subside - now it depends on what the manufacturers will do. Will they flood the market with cars, and we'll see huge discounts or will they resist temptation to overproduce and keep prices high.

Bingo, so too did Dealers Inflate their prices because of Supply Restrictions.

So who is at fault here? Dealers or Manufactures? The Chicken or Egg story. #1, Manufactures could not build Product due to Plant Shut downs. #2 Manufactures could not supply product due to Parts Shortages. Mostly caused by Manufactures, declining Parts Shipments during Shut Down. Suppliers, rerouting those products elsewhere. #3, The Economy didn't shut down, Causing even greater shortages, causing Dealers to make their profits from fewer pieces. #4, Manufactures revoking any Incentives due to Short Supply. #5 Supply starts to strengthen, Dealers hold out on More Profit/Unit sold, Manufactures see this and either Warn Dealers, or just take their Cut before the Dealers gets a chance. #6 Dealers continue to sell at New Inflated MSRP or Higher, without Incentives fom Manufactures, So the Manufactures take More Off the Top, raising MSRP and Invoices again.

The UAW/ 80% of Wages weather working or not, will bring this all back to reality (someday) when Dealers have 120-140 days supply on the lots, paying 7-9% Floorplan.

 

[tripowergto Jan2003]

I locked in at $4.48 a gallon when the price of heating oil dropped in November. Just checked and the market rate looks to be $4.29 a gallon for today, so I didn't do too bad with my locked in price. Better than my neighbor that locked in at I think $5.25 a gallon.

My wife squirreled away the electric bill, so I'll go from memory of using about 1,300 kw, which comes out to about $.29 kWh including all of the taxes and transmission charges. Eversource doubled the electric rate as of 1/1.

At least I'm past the worst - my January electric bill is the most expensive of the year and I shouldn't need an oil fill-up until May, and if it stays warm, I may not need one until early fall. Still painful though.

The above average winter temps allowed us to just use our heat pumps, allowing us to wait out heating oil until late Dec. I got it for $3.70/gal but it hit a high of $5.99. We're at roughly $.20 kWh in PA.

 

[BlackGTP]

The above average winter temps allowed us to just use our heat pumps, allowing us to wait out heating oil until late Dec. I got it for $3.70/gal but it hit a high of $5.99. We're at roughly $.20 kWh in PA.

I'm now wondering if my oil heat is cheaper than my ductless (heat pump).... I was around $.20 a kWh before they raised it.

 

[tripowergto Jan2003]

I'm now wondering if my oil heat is cheaper than my ductless (heat pump).... I was around $.20 a kWh before they raised it.

That's a difficult determination to make, but $.29 kWh is so high I wouldn't be too worried about using more oil.

 

[jpd80]

Bingo, so too did Dealers Inflate their prices because of Supply Restrictions.

So who is at fault here? Dealers or Manufactures? The Chicken or Egg story. #1, Manufactures could not build Product due to Plant Shut downs. #2 Manufactures could not supply product due to Parts Shortages. Mostly caused by Manufactures, declining Parts Shipments during Shut Down. Suppliers, rerouting those products elsewhere. #3, The Economy didn't shut down, Causing even greater shortages, causing Dealers to make their profits from fewer pieces. #4, Manufactures revoking any Incentives due to Short Supply. #5 Supply starts to strengthen, Dealers hold out on More Profit/Unit sold, Manufactures see this and either Warn Dealers, or just take their Cut before the Dealers gets a chance. #6 Dealers continue to sell at New Inflated MSRP or Higher, without Incentives fom Manufactures, So the Manufactures take More Off the Top, raising MSRP and Invoices again.

The UAW/ 80% of Wages weather working or not, will bring this all back to reality (someday) when Dealers have 120-140 days supply on the lots, paying 7-9% Floorplan.

The only dealerships with high inventory will be brands like Honda, VW and Hyundai/Kia that keep oversupplying vehicles that buyers have turned away from. So yeah, value coming in makes that folks generally wouldn’t buy, it’s either discount or go out of business.

Tesla dropping prices are gonna keep carving into Toyota, VW, Honda ect return buyers that never return….there’s a lot of worthless garbage brands that are incapable of saving themselves that just need to go away

 

[CJH]

I am going to be in the market for a new SUV this summer, as I have sat out the madness of the last few years. I have been following two models, and since last June (6/22) stock has increased dramatically, up 121% for one model and up 65% for another. I expect those values to be even greater by this summer. I am also seeing prices of those models start to moderate a bit, especially the one up 121%. Increased supply and higher interest rates should continue to push a slow down in the industry and moderate pricing.

 

[AWHoden]

But MSRP's have leaped since Covid. in some cases as much a $18,000 from the beginning of 2020

June 26 2020 F150 XLT 4x4 Crew Base $46719 Lariat $59549 CDN
Jan 21 2023 F 150 XLT 4x4 Crew Base $59125 Lariat $77325 CDN Options went up also

Supply and demand, welcome to capitalism.

 

[dannyg]

Don't forget that numerous cheaper cars are simply no longer sold here in the US:

Sonic
Fiesta
Cruze
Focus
Spark
Fit
Yaris


My point is just that if you chop out all the cheaper vehicles inevitably the ATPs go up.

 

[CaptainDan]

Don't forget that numerous cheaper cars are simply no longer sold here in the US:

Sonic
Fiesta
Cruze
Focus
Spark
Fit
Yaris


My point is just that if you chop out all the cheaper vehicles inevitably the ATPs go up.

Add in the production limitations due to supply chain issues, wherein automakers will prioritize the production of higher profit models (in addition to dropping lower profit models) and the average price paid goes up.

These last few years had some definite challenges and shouldn't be thought of as a "normal" period.