Two trends emerged when experts from Cox Automotive, Edmunds and Kelley Blue Book took an initial look at auto data from February — rising new-vehicle costs and spiking interest rates.

Kelley Blue Book noticed the average transaction prices for new models climbed nearly $1,000 year-over-year in February as interest rates on new-vehicle financing are expected to hit their highest level since 2009, according to Edmunds.

KBB analysts reported the estimated average transaction price for a light vehicle in the United States was $36,590 in February. New-vehicle prices increased $993 or 2.8 percent from February of last year.

Edmunds indicated the annual percentage rate (APR) on new financed vehicles averaged 6.26 percent in February, compared to 5.19 percent last year and 4.56 percent five years ago. Edmunds experts attribute this in part to automakers reining in zero percent financing deals and overall low interest rate offers.

In February, Edmunds discovered zero percent finance offers constituted 3.22 percent of all financed deals compared to 8.28 percent last year and 6.95 percent five years ago, and only 18 percent of shoppers received an APR under 3 percent in February, compared to 29.91 percent last year, and 45.49 percent five years ago.

Additionally, Edmunds its data showed the average transaction price of a new vehicle is expected to remain elevated, hitting $36,331 in February.

“Shopping conditions are pretty unfavorable for consumers across the board, and even those with good credit are having trouble finding compelling finance offers,” said Jeremy Acevedo, Edmunds’ manager of industry analysis. “As rising vehicle costs and interest rates continue to compromise affordability, more shoppers might find themselves priced out of the new vehicle market.”

Although credit conditions continue to tighten, Edmunds noted that shoppers who do finance new-vehicle purchases are refusing to budge on the vehicles that they want. The average amount financed for a new vehicle hit $32,071 in February compared to $31,313 in 2018 and $24,477 five years ago, which Edmunds analysts note reflects sustained shopper preferences for pricier trucks and SUVs.

“The consumer appetite for SUVs and trucks grew out of a time when it was far more affordable to buy these vehicles, and even now that finance conditions aren’t nearly as friendly, shoppers still refuse to settle for less car,” Acevedo said.

“With auto loan delinquency on the rise, it’s more important now than ever for consumers to understand the risks associated with financing more than what you can afford,” Acevedo added.

Cox Automotive senior economist Charlie Chesbrough also offered his assessment after review February auto-industry activity.

“February had a lot of good economic news to support a healthy vehicle market outlook, but that may not be coming to pass,” Chesbrough said. “The stock market has had a tremendous ride since the start of the year and consumer confidence, which took a tumble in January, has regained much of its decline.

“With January’s government shutdown and record-breaking sub-zero temperatures in the rearview mirror, we expected a general upward lift in February,” he went on to say. “However, given that this doesn’t appear to be happening, the results today suggest a much bigger story: The sales pace has finally shifted into a lower gear than the mid-17 million rate we finished 2018 with.”

New-Vehice Finance Data

Used-Vehicle Finance Data

Source: Edmunds