Cox and Moody's Debut Vehicle Affordability Index

In the US, online auto trader Cox Automotive and ratings agency Moody's Analytics have launched the Vehicle Affordability Index (VAI), to quantify price movements in the new vehicle market in relation to the spending power of the US consumer.

To measure 'true vehicle affordability' for the new VAI, the firms combine analysis of shifting household incomes, incentive spending by the automakers and dealers, and actual finance charges on new vehicle loans. VAI will be updated monthly using the latest data from government and industry sources, including key pricing data from Cox's subsidiary Kelley Blue Book. It will be released mid-month, to demonstrate if the prices paid for new vehicles are moving out of consumers' financial reach, or becoming more affordable over time.

For October, VAI was at 33.13, representing the number of weeks of income needed for a median-income household to pay off a new vehicle. According to Cox Automotive Chief Economist Jonathan Smoke: 'Until now, the industry lacked visibility into consumer spending power and interest rate changes relative to the movement of new vehicle prices. The Vehicle Affordability Index is filling this void by providing a comparative way to measure affordability while eliminating guesswork and prognostication'.

Web sites: www.coxautoinc.com and www.moodysanalytics.com .