iSeeCars is sharing its latest data about car affordability, and it paints a not-so-great picture for car buyers. Its analysis shows that once popular, mainstream models are no longer affordable for the average consumer, even used.
Here are the highlights of the iSeeCars' study:
- New car affordability has dropped 13.3% from August 2019 to August 2022; used car affordability has dropped 26.7% based on iSeeCars Car Affordability Index
- Used cars which had been affordable in 2019 but aren’t in 2022 include several popular models such as the Honda Accord, Honda CR-V, Subaru Forester, Toyota Camry, and many others
- New cars that were affordable in 2019 but aren't in 2022 include the Nissan Frontier, Chrysler 300, Jeep Cherokee, and Kia Sorento
It's easy to see why this is happening given the current economy. iSeeCars researchers say household income and wage growth just hasn't kept pace with the price increases due to inflation, supply chain issues and other pandemic-related issues. This means consumers are taking out longer term loans that require less money down. Or just choosing an older vehicle that's less desirable.
iSeeCars says between August 2019 and August of 2022, new car prices increased by almost 29 percent, and three-year-old used car prices increased by 52 percent. Compare that to incomes, which increased in comparison by just 13%.
- Used Cars that are No Longer Affordable
- For the complete list of 33 vehicles that fell out of affordability over the past three years, click here.
- New Cars that are No Longer Affordable
- This list is shorter and is led by the Nissan Frontier. Click here.
About The Study
iSeeCars says it analyzed new and used car affordability over time by calculating its Car Affordability Index, which compares median household income to an idealized income for financing a car. An index value of 100 suggests household income is exactly equal to the idealized income for a car purchase. Values above 100 indicate household income is above the idealized income and therefore cars are affordable; similarly values below 100 suggest actual income is less than the idealized income, meaning cars are unaffordable.
For example, an index value of 125 means household income is 25 percent more than the idealized income, and an index value of 75 means household income is 25 percent less. The idealized income is based on typical car loan rates and terms (60 months for new cars and 36 for used cars), as well as an assumption that car payments should be no more than 10 percent of a household’s annual income.
To read the complete study and see a list of affordability by state and metro area visit iSeeCars.
