Home » New Cars Are More Affordable Than They’ve Been In Over Two Years

New Cars Are More Affordable Than They’ve Been In Over Two Years

Tmd Car Prices Drop
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New cars have suffered from an affordability crisis since the middle of the pandemic when a shortage of microchips and other issues caused prices to rise dramatically. While we’ve come down from the price peaks, higher interest rates have kept a major index of affordability stubbornly high for the last year. That index just fell off a damn cliff.

It’s time for a little good news around here at The Morning Dump, so I’m excited to lean on the vehicle affordability report that just came out this morning. I guess there’s good news if you’re a Stellantis shareholder as profits, earnings, et cetera remained fairly strong in 2023.

Vidframe Min Top
Vidframe Min Bottom

Do you want a big, fancy BYD SUV in Europe? There’s good news for you there as well as BYD is going to show a few new-to-Europe models at the Geneva Motor Show. And then, finally, uhh… good news if you want a Citroën in Russia because Russia has found a way around sanctions, maybe, to build them. Ok, it’s a mostly good news Morning Dump.

New Cars Are Way More Affordable

Cox Affordabilty Index
Source: Cox Automotive

This shouldn’t be a huge shock to anyone who regularly reads The Dump or this site in general (we were just talking about affordability a couple of weeks ago), but affordability is itself a curious concept. Just because the list price of an item is cheaper doesn’t make it more affordable if financing costs go up, or if wages go down.

That’s why I’m a fan of the Cox Automotive/Moody’s Analytics Vehicle Affordability Index, or CAMAVAI, or just the Affordability Index. The methodology behind this is pretty sound (you can read about it here if you wanna geek out) and boils down to looking at the actual transaction price for new light passenger vehicles (taking into account incentives), the amount people generally finance, interest rates, and how much money households are making. The index then shows the best guess for the number of median weeks of income a typical household would need to purchase a new vehicle.

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Great news! The January affordability report is out and there was a huge, Wile E. Coyote-looking-down-off-a-cliff-ass drop.

There are a lot of good numbers here, with the average payment dropping by 3.2% and the median weeks of income needed to purchase the average new vehicle hitting 37.5 weeks, the lowest level since August 2021.

What’s contributing to this? Median income grew 0.3%, the KBB average new vehicle transaction price went down 2.6%, and the average new vehicle loan interest rate dropped slightly to 10.28%. All of those metrics are moving in the right direction for affordability.

“Just as new-vehicle affordability improved in January to its best level in over two years, access to auto credit moved in the other direction,” said Cox Automotive Chief Economist Jonathan Smoke. “Income growth continued while both the average new-vehicle price and the average interest rate declined making new vehicles more affordable. However, we saw credit access to auto credit decline to its lowest level since August 2020.”

Credit is sort of the outlier here, even with interest rates declining slightly there is a larger concern in the economy over credit and that could lead to the rate stalling out instead of continuing to improve.

Stellantis Has A Strong 2023 In Spite Of Product Mix

2025 Ram 1500 Rebel

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Stellantis posted a record $20 billion of net profits in 2023, up from 11% in 2022. How did they do it? A lot of it was higher pricing.

From The Detroit News:

Upped price points particularly in foreign markets drove the earnings growth in the third year of the company that includes Chrysler, Dodge, Jeep and Ram as well as the likes of Alfa Romeo, Citroën, DS, Fiat, Opel, Peugeot and Maserati. Although the company trumpets a higher average transaction price of $53,300 than its competitors in the United States, production disruptions and costs associated with new labor agreements last year kept North America from seeing earnings growth. There also was a 1% decrease in U.S. sales last year, but Stellantis says it’ll remain “disciplined” on pricing.

Huh.

We sort of talked about this earlier this week. Stellantis, at least in the United States, doesn’t have a particularly compelling product portfolio outside of Jeep and, to a lesser extent, RAM. Keeping prices up is a strategy and Stellantis thinks it’ll keep to high margins on its products in 2024, but at some point you can only lose so much market share.

The ability of Stellantis to deliver new products, on time, across its brands is going to be key to getting through 2024 without losing ground.

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BYD Is Bringing The Yangwang U8 To Geneva

Byd Yangwang U8 1

We talk a lot about Chinese automakers bringing cheaper cars to markets like Europe and Latin America, but many of these companies also build luxury cars that are, in theory, cheaper than rivals.

BYD will have some of these vehicles on display in their massive Geneva Motor Show display this week, including the moonwalking BYD Yangwang U8. From a company press release:

BYD will also be teasing public reaction at the 2024 Geneva Motor Show with the exciting European premiere of YANGWANG technology. YANGWANG is the supreme luxury sub-brand of BYD and represents the pinnacle of innovation in inspirational new energy vehicle technology. BYD provides a glimpse of the exceptional capabilities of YANGWANG technology during a sensational preview at the Geneva Motor Show.

The automaker will also have its currently available products like the ATTO 3 and Seal there, of course, next to its big Mercedes-targeting SUV. I’m curious as well what kind of reception the Yangwang gets.

Report: Russians Are Getting Around Sanctions To Build Citröens

C5 Aircross Suv 1600x780 2

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In light of Russia’s brutal and illegal invasion of Ukraine, Stellantis joined most other automakers in walking away from Russia. So what are the Russians doing? Figuring out ways to build Citröens according to this exclusive Reuters report:

In December last year, Russian company Automotive Technologies imported at least 42 car kits for assembling the Citroёn C5 Aircross model at the Kaluga plant, which is still majority-owned by Stellantis, customs records drawn from a commercial trade data provider showed.

Manufactured in China, the kits were produced by China’s Dongfeng Motor Group the data showed.

Automotive Technologies was assembling the Citroёn C5 Aircross at the Kaluga factory, according to two employees at different Russian car dealerships. The sources spoke on condition of anonymity because the information is not public.

What’s curious is that Stellantis, which owns Citroën, has a partnership with Dongfeng, which is why Dongfeng has the ability to produce these kits.

This is tricky and it’s not clear if it’s actually a violation of the sanctions or not. Stellantis, for its part, has basically admitted it doesn’t have any control of its plant in Russia, but I’m not sure if that is true of its Chinese partnership.

What I’m Listening To While Writing TMD

Let’s get going today with a little Tame Impala. I love this song. I love the Rihanna cover as well. The whole album is great.

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The Big Question

The economy, to some degree, isn’t just about numbers. It’s about vibes. If people have a lot of savings but are worried about the future they’re less likely to spend, which slows down the economy, which in turn leads to reductions in earnings, which leads to layoffs, which leads to a bad economy, thus proving the vibes correct. How are you feeling about the economy right now where you are?

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Taargus Taargus
Taargus Taargus
2 months ago

I live in a small city that has it’s own economy (sort of) but also sort of functions as a bedroom community to a couple of larger cities about 45 minutes away. This is a classic northeastern former mill town that went through absolute hell in past decades, a dead downtown killed by suburban nonsense, etc. A lot of great things have happened over the past 10 years, downtown is mostly revived, and overall vibes are good. But we just lost a cement plant with 100 jobs. And we lost one of the smaller paper mills. And we’re about to lose 300 jobs at one of the medical device plants. And the list goes on.

So everyone here is getting a little anxious, because while we haven’t seen anything topple yet, we’re not sure how many more job/tax revenue losses we can sustain. But also, there’s genuinely no housing available whatsoever, like much of the country. There may be 2-3 houses for sale at any given time, all purchased instantly, all far too expensive and double the price they were just a matter of a few years ago. The only housing that ever gets built here anymore are hideous, stupid apartment complexes, all built by the same clown, that are all segregated from any sort of transit, or any sense of community (basically a parking lot with a vinyl clad rectangle in the middle). Our city is essentially full, but the suburban area around it has developed horrible zoning laws and makes it so the only affordable housing that can be built are isolated ghettos.

What was I going on about? Oh yeah, the economy here is on thin ice. It looks great when you walk/drive around, but something is gonna have to give at some point if we keep losing jobs and costs keep being driven skyward.

Xpumpx
Xpumpx
1 month ago

Would that be Dragon Cement? That whole area is just a tourist trap now, sadly. My mother in law is up that way.

Taargus Taargus
Taargus Taargus
1 month ago
Reply to  Xpumpx

Actually a division of Lehigh Cement. Think Upstate NY versus, I’m guessing you’re referring to Maine?

Tourism is one of our remaining industries, being on the border of the Adirondack Park.

Xpumpx
Xpumpx
1 month ago

Maine was what I was thinking. It really is everywhere, though

Chris D
Chris D
2 months ago

Yang Wang You Ate.

That is a really stupid name for a car.

CUlater
CUlater
2 months ago
Reply to  Chris D

My first thought was ‘Oh, the tragedy’ followed by ‘sigh, yet again…’.

Myk El
Myk El
2 months ago

How do I feel about the economy? Low unemployment and a strengthening labor movement is definitely a positive. I am doing fine myself, but I see a lot of people struggling while being gainfully employed. I can afford to run a 2nd, fun car, so I know I’m doing better than a lot of folks, but I notice what I spend on groceries, etc. is a lot.

Mr Sarcastic
Mr Sarcastic
2 months ago

This has raised one of my personal pet peeves of using statistics to proce a falsehood.
My favorite example is statistics show 28% of car accidents are caused by drunk drivers. So that means 72 % of accidents are caused by sober drivers. Now that is asinine you and that those 28% of accidents are caused by 2% of drivers you get the real story.
In addition lastbyear of Trump gas prices in my area $2.12 a gallon. Then Biden they went up to $3.39 a gallon first year. Now they are $3.35 and we are being told gas prices are coming down. Why compare 1 year? Around the beginning of Covid average new car prices around $28,000. Then shipping demand covid it was $43,000. Then inched up more but if it isn’t back down to $28,000 the price is still up. In the grocery store I don’t believe Pepsi is 50% off when they inflate the regular price. Why allow car industry to double prices then reduce it by 25% and say cheaper? We need a 5 year graph to be awRe.

Defenestrator
Defenestrator
1 month ago
Reply to  Mr Sarcastic

So… you’d prefer if Biden crashed the economy like 2020 to drive demand low enough to get $2.12/gal gas prices again?

The F--kshambolic Cretinoid Harvey Park
The F--kshambolic Cretinoid Harvey Park
1 month ago
Reply to  Defenestrator

Can we please please please keep this on a different forum

Peter d
Peter d
2 months ago

In my area car inventories seem to be building – suggesting prices should be coming down, but it seems like that is not the case based on the dealers websites (I have not braved a dealership for a few years). I did see at the local Jeep/Chrysler dealer an electronic billboard advertising a Grand Cherokee 4xe for lease at $457/month with $4k due at closing – which suggests at least $10k on the hood for this $60k+ vehicle. Now if only I could get a deal like this on a car that I actually sorta want to drive. In the meantime I continue to daily the 2010 G37x I inherited from my mom.

Huja Shaw
Huja Shaw
2 months ago

“How are you feeling about the economy right now where you are?”

My cocktail napkin math tells me that as long as housing and healthcare costs are sorted, the rest is mostly under my control – or so far out of my concern that there is no sense hedging for it (i.e. once-in-a-century pandemic that shuts down the world for a couple of years). A few neighbors lost their jobs in the middle of last year but all have either found a similar-paying job or are deep into interview process as it seems white-collar hiring has picked up. People renting, buying a house, and who have children seem to be getting their asses kicked.

Mr Sarcastic
Mr Sarcastic
2 months ago
Reply to  Huja Shaw

Agreed and food is up rent is up gas is up ain’t nothing going down but my 401K

Huja Shaw
Huja Shaw
2 months ago
Reply to  Mr Sarcastic

The glass-half-full view is that if you are still contributing to your 401K, you are buying equities at a lower price. Your 401K is the long game. How it fares from year to year doesn’t really matter vs how it does decade to decade. At least that’s what I say to myself when the balance trends downward.

Mr Sarcastic
Mr Sarcastic
2 months ago
Reply to  Huja Shaw

Aha I got you now. My mechanic just told me connection rod going metal shavings in the oil my engine is about to go kaboom. So what do you say to that. Really buy a shitbox or replace the motor in a 2001 Vehicross? Ooh currently unemployed

Huja Shaw
Huja Shaw
2 months ago
Reply to  Mr Sarcastic

Sorry to hear that. Hope things turn your way soon.

Mr Sarcastic
Mr Sarcastic
2 months ago
Reply to  Huja Shaw

Thanks I’m sure they will. I just bought a lottery ticket. Yes sarcasm a bit. Others have it worse.

Chris D
Chris D
2 months ago
Reply to  Huja Shaw

The mortgage payment is stable, groceries are a bit more expensive, gas isn’t cheap but not killing me, no electricity bill thanks to my solar panels, and my income is way up. So life is good.

Huja Shaw
Huja Shaw
2 months ago
Reply to  Chris D

It’s a powerful thing to turn your housing cost from a variable that is largely out of your control (rent) to a constant you can count on for decades (long-term mortgage).

Mike B
Mike B
2 months ago

I’m not optimistic about the economy, I feel we’re arranging deck chairs while racing toward the iceberg.

Gas has been holding steady at 2.99/gal for 87 in my area, I’m fine with that. The $1.50/gal prices from early 2020 are never coming back, and if they do, it’s because something terrible has happened. Lots of people waxing nostalgic about those prices seem to forget the reason for it – you could barely give a barrel of oil away in 2020 since demand was down so low by people not going anywhere.

Fueling up is no longer painful, but I STILL get sticker shock at the grocery store. I’m single and my food budget has nearly doubled, I cannot even begin to imagine the pain this is inflicting on a family of 4 or 5.

I don’t have kids, but I’m hearing from others how ridiculously expensive childcare has gotten.

Cars seem to be more expensive than ever, but buying a brand-new car is a choice, used car pricing seem to be coming back down to earth.

The biggest source of my anxiety though is housing. My rent went up almost $400/month this year, and I still have a damn good deal for my area. Market rate is probably another 5-600 on top of that. People are struggling so hard to find places to live, never mind places they can AFFORD. Between prices and rates going up, a giant swath of people is most likely permanently locked out of the housing market. I’ll be renting the rest of my life, I’m 45 and have never owned a home so that ship has sailed.

Literally every day I read an article about how some town has voted down a proposed project to build more housing, keeping the supply low. The NIMBY crowd has theirs, so they gotta keep inventory down and pricing up for everyone else!

The latest is Milton, MA, they just voted down a project to build multi-family units in close vicinity to existing public transport. This is a perfect scenario for multifamily, some of those units may be able to go carless, which is what municipalities should be encouraging. But no, not in my backyard!

Fuck you, Milton MA.

Peter d
Peter d
2 months ago
Reply to  Mike B

Indeed fuck you Milton – how did almost all the other towns update their zoning with minimal issue, but Milton thinks it’s special. Note that they rejected the zoning change and not specific projects – the town should have been able to negotiate for good projects within the new zoning. On the radio today I heard a Milton voter saying that any new housing wouldn’t be “affordable” showing a total ignorance of Econ 101 supply and demand. I also don’t know why our population is growing so much – I have noticed all kinds of new Apartment complexes open in the suburbs, but prices remain high because the population grew like 600,000 people in the state in the last decade – seriously I was born here so I don’t have much of a choice (Townies don’t leave), but why are so many people moving to this ultra high cost of living area with a failing mass transit system??

Mike B
Mike B
2 months ago
Reply to  Peter d

I recently read that people are moving out of MA, but I also saw the stat of the growth since 2010 that you mentioned. I also don’t get why one would choose to move to a high COL area. Anecdotally, I belong to a few outdoor activity FB groups, and every so often someone will post about how they’re moving to the Boston area and are looking for where to mountain bike (or whatever the group activity is). Someone always asks, “Why are you moving HERE?” And the answer is always “work”.

I think the population growth was pre-2020, and now that housing is so insane, even in the New Bedford/Fall River area, that people are starting to get fed up and are leaving to places where they can afford to raise their families.

I moved to RI years ago, but still spend a ton of time in MA, so I’m kind of a “townie” too in that aspect. It’s tough to pick up and leave your family and everything you know. RI is pretty much the same, prices are going through the roof while nothing is really getting built. Last year 64% of transactions in my town were out of staters buying property, presumably for short term rentals or vaca homes.

BOSdriver
BOSdriver
2 months ago
Reply to  Mike B

Mike B…. – zoning is local and even the local media messed this up. Also, blame goes to both sides for poor messaging and folks not wanting to listen to one another and just accept a mediocre plan to check the box, just like nearly every other Boston area town did.

Milton didn’t vote it down only for the reasons you stated. The folks just want a better plan than what was agreed on. There are people who voted no because there is zero plan to make those units affordable. Some thought it was ridiculous to claim that a few small trollies rolling through the edge of town and a non-used bus line nearby qualified the town as “rapid transit” – most want to try again to qualify for a lower transit status which would cause the amount of zoned units to drop lower. Others are upset that they crammed the zoning for 6 story buildings in an area that is not walkable to transit or area amenities (instead of putting it near the trolly line – can’t have that, too close to multi-million $ homes).

What good does cramming 400-600 units near the highway? The likely development that would be built would be a large building, 1-2 bedroom units would be sold around $700k-$800k+, plus monthly fees, and anyone living in that area would likely need a car.
On top of this for housing advocates, nothing would have likely been built. Several units were already being counted for a development near East Milton Square, everything else zoned near the highway likely would never get built due to a leased out office building and a state DPW yard being the main tenants of the space, all at pretty much sea level and ripe for flooding.

The whole thing was, and still is a mess. The “yes” team did very little to persuade folks from voting “no” and then having the Governor and AG weigh in and try to strong arm voters by threatening the town, screw them. This was very much a middle finger to the state to say the town needed more time to come up with a better plan. Go look at other cities and towns nearby, they are filled with just as much shady zoning plans, most unlikely to ever be built, but they check the box to keep the politicians happy so they can say they did something. Milton has been built out for decades, the ship has sailed on available land. They have even tried building a needed school for years… no land available, yet somehow they are supposed to find some magical parcels so they can cram in condo towers.

Mike B
Mike B
2 months ago
Reply to  BOSdriver

Thanks for the clarification. You’re correct, none of that was mentioned in the article I read. I envisioned this as being near a T station, not just a bus line, so the mention of “public transit” now seems misleading. I actually wanted to edit my post to be less harsh, but time ran out before I could. Apologies to those from Milton.

As far as the units being expensive, that’s to be expected these days, no? With the cost of land, materials, and labor, it makes sense that most new construction is going to be high end, to make the juice worth the squeeze for the builder.

Now I’m clearly not at all familiar with Milton, but perhaps new, high end condo type units will attract older residents that may finally be ready to downsize from their paid off single-family homes, freeing up those homes for younger families? Of course, those families will most certainly need to be very well off, so perhaps that’s a moot point as well.

*sigh* …. Housing in MA is f*cked.

New Beford and Fall River are having the same issues. Recently a city Counseller in NB proposed removing the parking requirements for new construction, presumably in the hopes that the new commuter rail stop would attract car-free types, but he got a lot of pushback on that.

Mr Sarcastic
Mr Sarcastic
2 months ago
Reply to  Mike B

Hey Mike I bet you could own a home in your are for less than 10k down and have a mortgage payment less than your rent if you want and are willing to accept a pain for less than a year.

Mike B
Mike B
2 months ago
Reply to  Mr Sarcastic

I’m almost afraid to ask, but … ???

Mr Sarcastic
Mr Sarcastic
2 months ago
Reply to  Mike B

Check FHA houses for sale needing work. Apply and read about an FHA203 LOAN. They will finance purchase and repairs on one loan at a lower interest rate as long as no crazy ideas and commit to reside for 5 years. You can sell in case of hardship. Also don’t go for the most expensive area. Any questions feel free to ask. I bought a beautiful queen Anne built in 1900 4 bedrooms on the river. New windows, flooring, ac. Made 40,000 on resell when lost my job. They look after you as well.

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