March was the best period for buying a car in more than three years in terms of affordability, as factors such as loan rates and incomes grew more favorable, according to automotive services company Cox Automotive.
“In March, the typical payment declined by 0.2 percent to $739, which was down 1.3 percent year-over-year.
“The number of median weeks of income needed to purchase the average new vehicle declined to 36.7 weeks from the downwardly revised 36.9 weeks in February.”
A year ago, it took 38.4 weeks of median income to buy an average new vehicle.
A number of metrics related to affordability were better in March. For instance, the estimated auto loan rate was down 45 basis points year over year, the average price of new vehicles fell by 0.2 percent month over month, and incomes grew by 3.4 percent on a yearly basis, the company said.
Jonathan Smoke, chief economist at Cox, said affordability was a “key concern” for people looking to buy vehicles and that it has shown a steady improvement over the past years.
“In 2025, we have seen improvements in affordability each month. In March, the average price of a new vehicle decreased once again. This decrease, combined with higher incomes and slightly lower interest rates, more than offset a reduction in incentives,” he said.
“However, the real test will come in April, when tariffs are likely to have more of an impact on the economy and the auto market.”
President Donald Trump recently told reporters at the White House that he was considering helping automakers transition through the initial tariff period.
“I’m looking at something to help some of the car companies where they’re switching to parts that were made in Canada, Mexico, and other places,” he said.
The president said American automakers may need extra time to adjust when it comes to manufacturing more vehicles and parts in the United States.
Tariff Effect, Dealer Sentiment
An April 14 report from S&P Global forecasts the auto tariffs to have a negative impact on the U.S. market, with projected sales for 2025 dropping by roughly 700,000 units from previous expectations.“The impact of the tariffs has the potential to have a massive near-term impact on global sales and production, with the U.S. and North America feeling the worst of the impact,” the report reads.
“The U.S., Canada, and Mexico have built an interdependent trade and manufacturing ecosystem over the past thirty years. Trump’s auto tariffs are providing a shock to the system and are expected to result in higher manufacturing costs and higher vehicle prices in all three countries.”
“Certainly, a theme that continues through all of the findings is that the first quarter is better than a year ago for sure,” Smoke said.
“Even though we have some risks about the future, and it’s not exactly a straightforward bet for improvement by dealers, the sentiment at the time of this survey was certainly more positive than it was a year ago.”
The market outlook sentiment improved in the first quarter to its highest level since 2022. The strengthening suggests dealers are expecting a strong market during the imminent three-month period.
Smoke said several positive factors are currently working in favor of dealers, including customers feeling an urgency to swiftly buy a vehicle and healthy inventory.
“At least as we head into spring, conditions are favorable,” he said.
