New analysis and research from Cox Automotive and GfK AutoMobility showed how potentially out of reach taking delivery of a new vehicle might be for consumers with subprime credit and/or lower income.

New-vehicle affordability improved again in February following modest improvement in January, according to the Cox Automotive/Moody’s Analytics Vehicle Affordability Index. But new research from GfK AutoMobility indicated that 60% of U.S. auto “intenders” — individuals planning to buy or lease a new vehicle — said that affordability is already affecting their decision.

Cox Automotive experts acknowledged that several factors helped as declining new-vehicle prices, increasing incentives, improving incomes and slightly lower average interest rate on new-model finance, as calculated by Moody’s Analytics, reduced the average monthly payment for a new vehicle to the lowest level since October 2022.

Analysts also calculated the number of median weeks of income needed to purchase the average new vehicle in February declined to 43.2 weeks from an upwardly revised 44.2 weeks in January.

The median income grew 0.3% in February, and according to Kelley Blue Book, incentives from manufacturers increased and the new-vehicle average transaction price declined 1.4% in February from January.

Experts added the average interest rate connected to new-vehicle financing declined 31 basis points to 9.17%, as calculated by Moody’s Analytics.

As a result of these changes, the estimated typical monthly payment declined 1.9% to $765, from an upwardly revised $781 in January. The average monthly payment peaked at $789 in December.

However, Cox Automotive chief economist Jonathan Smoke offered perspective, especially when dealers work with customers who might not have deep financial resources.

“With prices easing down and incentives moving higher, new-vehicle affordability has slightly improved to start 2023,” Smoke said in an analysis. “However, to put the payment in perspective, the typical American household can afford a car payment of around $400 a month. With an average monthly payment of nearly twice that, the new-vehicle market remains heavily skewed toward the most affluent buyers.”

Perhaps not surprisingly, GfK AutoMobility’s research supports Smoke’s assertions.

GfK AutoMobility said lower-income consumers are also much more likely to have affordability concerns, with 71% of those who say high prices are impacting their vehicle decisions live in households earning less than $100,000 a year, while just 13% are in homes earning $150,000 or more.

GfK also found that, since January 2020, the largest drop in vehicle demand has been among middle-income buyers (those earning $50,000 to $100,000 a year), especially those married with children.

“The question is: Who can still afford a new vehicle and how will they make the finances work? Our new analysis shows that coping strategies differ dramatically depending on income, generation, time of intention and other factors,” GfK AutoMobility senior vice president of consulting Julie Kenar said in a news release.

“To help more Americans find ways to afford a new car, manufacturers and sellers need to understand fully the challenges consumers face — and the purchase strategies they plan to employ,” Kenar added.