Bridge the Affordability Gap in Automotive Retail

“Affordability is the air consumers are breathing—and right now, the air is thin.” – Micah Tindor, Assistant Vice President of Consumer Vehicle Disposal at Cox Automotive

Affordability is shaping every deal in today’s automotive market. Prices and payments are up. Loan terms are stretching. More trades arrive underwater. The path forward is clarity and empathy—explain the appraisal, invite a counteroffer when needed, and maintain a seamless handoff from online to in‑store.

That’s the message from Micah Tindor, Assistant Vice President of Consumer Vehicle Disposal at Cox Automotive, who recently unpacked the latest affordability trends and dealer strategies in an AutoNews webinar. As Michah put it, “Affordability is the air consumers are breathing—and right now, the air is thin.”

In this article, we distill Micah’s research and actionable insights into five key segments driving affordability—vehicle price, monthly payment, loan structure, negative equity, and insurance costs—paired with practical soft-skill moves managers can use to bridge the gap for both dealers and consumers.

The Five Segments Driving Affordability

Segment	Key Metrics (Timeframe)	Why It Matters	How to Respond with KBB ICO
Vehicle Prices	New: ~$50,080; Used: ~$25,721 (Jan’26)	Higher prices narrow options, slow decisions	Present the data-driven number by Kelley Blue Book Instant Cash Offer; explain value factors
Monthly Payments	Avg new payment: $740–$750; 1 in 5 buyers at $1,000+; 8.6% of loans at $1,000+	Budgets are tight; shoppers think in monthly terms	Lead with monthly total (payment + insurance + repairs)
Loan Structure Stress	Avg term: 69 months; 22% at 84 months; Avg APR: ~7%	Longer terms lower payments now, but increase future risk	Explain trade-offs; align on term/down payment
Negative Equity	28% of trades underwater; avg shortfall: $6,905; rolling shortfalls push monthly ~$907	Underwater trades complicate deals and financing	Break down equity simply; invite Counteroffer; use Dealer Boost
Insurance	Insurance: $2,697/year avg; premiums +16.5% (2024), +7.5% (2025)	Ownership costs often surface late and derail confidence	Bring these costs forward; set realistic monthly expectations

Unpacking the five segments of affordability above (price, monthly payment, loan structure, negative equity, and insurance costs) is the first step toward meeting the needs of today’s shoppers . Micah explains, “The cost of vehicles in particular are outpacing earnings.” That means buyers are feeling the pressure from all sides, not just when it comes to vehicles, but across their whole budget.

Let’s break it down. According to Kelley Blue Book and Cox Automotive data, new cars are averaging about $50,000¹, and used ones are close to $26,000 (as of January ‘26)². That means buyers have fewer options that fit their budgets. Monthly payments are up too—the typical new car payment is around $740 to $750³, and about one in five buyers is paying over $1,000 a month⁴.

To make those payments work, people are stretching out their loans. The average term is 69 months, and more than one in five loans lasts 84 months, with interest rates around 7%⁴. While that can help lower the monthly bill, it can also lead to negative equity down the road.

Negative equity is showing up more often: about 28% of trade-ins are “underwater,” meaning the owner owes more than the car is worth³. The average shortfall is nearly $7,000 and rolling that can push monthly costs to about $900⁴. And don’t forget about insurance, which averages $2,700 a year. Insurance premiums jumped 16.5% in 2024 and are expected to go up another 7.5% in 2025⁴.

Why does all this matter? Shoppers are looking for clarity and empathy. They want to understand the numbers and feel confident in their decisions. That’s where Kelley Blue Book® Instant Cash Offer (KBB ICO) comes in. You can walk customers through how KBB ICO uses real-time market data and their vehicle’s details to create a fair, unbiased trade-in offer. Talk about monthly costs—not just the sticker price—including insurance. Explain trade equity in simple terms. And if a customer needs to negotiate, use Counteroffer to keep the conversation open and Dealer Boost to help make a deal that works for everyone.

Bridge the Gap with Soft-Skill Moves that Win

Affordability is more than just numbers. It’s about how you talk with customers. “As dealers, it’s not just about the numbers,” Micah explained in his webinar with the AutoNews team. “It’s about how we guide the conversation. When affordability is tight, transparency and empathy make all the difference.” Below are several soft skill moves that can help build trust, reduce friction, and guide buyers through their decision.

Move 1: Lead with Transparency

Customers want…nay, need to know how you arrived at your offer. As consumers price shop their value they start to build their own idea of the logic and science behind the appraisal value so denying them the logic can erode trust faster than a spam call. With 100 years of credibility, an Offer backed by Kelley Blue Book can provide confidence that it is fair and unbiased, but you can take it a step further. Here’s what to do:

Walk through the appraisal step-by-step using Kelley Blue Book® ICO. Show customers how features, condition, and market data shape the KBB ICO offer.
Point out what adds value (features, condition), not just what subtracts (damage, mileage).
Explain how KBB ICO uses current market data to determine the final number.

Sample script: “Let’s review your vehicle together. Kelley Blue Book® Instant Cash Offer uses current market data and your car’s details to generate this offer—so it’s not just my number, it’s KBB’s. Here’s what adds value, and here’s what brings it down. I’ll walk you through how KBB ICO arrived at this number.”

Move 2: Normalize the Ask

Many buyers need more money to make the deal work, especially if they’re underwater—right now; 28% of trade-ins have negative equity, with an average shortfall of $6,905². That extra debt often pushes monthly payments to nearly $907.

Here’s how tools like KBB ICO can help:

Counteroffer gives buyers a simple way to say what they need and why, keeping the conversation open and honest.
Customers can either accept the Offer or make a counteroffer—which is especially important for those who are underwater. As many as 54% of consumers could be underwater by 2028 if trends continue.
As an ICO customer, you get notified right away and can respond directly, helping you prioritize motivated sellers and work toward a deal that fits both sides.
Additionally, if a customer makes a counteroffer and you want to stay competitive, Dealer Boost gives you the flexibility to adjust your offer within set rules, so you can win more trades while protecting your bottom line.

Sample script: “I see you submitted a counteroffer. I appreciate you letting us know what you had in mind. The next step is for us to take a look at your vehicle in person so we can give you the most accurate number. When can you bring it by for a quick appraisal? It usually takes just 10–15 minutes.”

Move 3: Talk Monthly, Not Just Total, Price

Shoppers rarely think in terms of a vehicle’s total price—they think about what they can comfortably afford each month. Breaking down the true monthly cost builds trust early and prevents surprises later. This should include the loan or lease payment, regular maintenance, and insurance.

Your responsibility:

Open the conversation with monthly expectations so you can:
- Right‑size the vehicle selection early
- Adjust loan terms or structure smartly
- Align down payment options
- Protect customer confidence before you even start penciling numbers

Sample script: “What do you have in mind for your monthly cost, including insurance? We can explore different financing options or find the right vehicle to fit your budget.”

Move 4: Pay Off AI-Assisted Research In-Store

Most shoppers now start online and increasingly with AI tools. They arrive informed, confident, and expecting the dealership to operate as seamlessly as the digital tools they used before walking in.

What to do next:

Pick up where the customer left off online.
Avoid repeating steps or asking for the same info twice.
Keep notes and valuations synced for a smooth handoff.

Sample checklist:

Review the customer’s online activity before they arrive.
Acknowledge their online and even AI‑assisted progress.
Continue the process without duplication or rewinding.
Present the next step clearly and confidently.

Sample script: “I see you did some work online to narrow things down. Let’s pick up where you left off so we don’t repeat any steps. I’ve pulled in your details, so we can keep this as seamless as possible.”

Affordability Front and Center

As Micah Tindor, Assistant Vice President of Consumer Vehicle Disposal at Cox Automotive, reminds us: “Evaluate every deal through the lens of affordability.” In today’s market, transparency and a customer-first approach aren’t just best practices—they’re essential for building trust and closing deals.

Tools like Kelley Blue Book® Instant Cash Offer with Counteroffer and Dealer Boost features make it easier to have honest conversations, meet customers where they are, and create win-win outcomes. By pairing data-driven insights with these solutions, dealers can bridge the affordability gap and deliver the confidence shoppers expect.

Ready to see how Kelley Blue Book^® Instant Cash Offer can help you bridge the affordability gap?

Request a demo today and experience the trusted data, transparency, and tools dealers rely on to close more deals with confidence. Better yet, come visit us at NADA to see how you can experience more inventory wins.