Inhale a deep, calming breath. Do you smell that? Spring is in the air and it smells like tax refunds! Approximately three out of four Americans receive a tax refund each year — which makes spring a busy season for dealerships — as 9% of Americans will spend it on a major purchase, such as a car.
Like other retail businesses, dealerships have their own ebb-and-flow. Tax season is a naturally busy time for car sellers as taxpayers consider using their refund on a car purchase. The prime tax refund car-buying season lasts about six to seven weeks, usually from March-May as early tax filers get their refunds. During this time, dealerships typically see 20-30% higher weekly sales than the rest of the year.
Will Tax Refund Car-Buying Be Different This Year?
Obviously the pandemic caused great adjustments in our personal lives as well as for businesses. The 2020 tax season was delayed and extended into July, which meant tax refunds came later. This year, the IRS only delayed accepting tax returns by two weeks, starting February 12, so dealerships should note the lag-time between filings and the arrival of refunds.
Also for dealerships, the pandemic accelerated the acceptance and usage of the online car-buying process. Many dealerships — perhaps even yours — activated lower or 0% financing within certain terms along with deferred payments. Many dealerships still offer this, which makes the tax refund season even riper for sales; especially for sellers eager to move the last of the 2020 models off their lots. With more negotiability on the actual car deal, it creates even greater incentives for more front-end sales of accessories in the virtual or physical showroom.
Stimulus Checks & Tax Refunds
Millennials are one segment of taxpayers that are likely refund-fortified car buyers. An eBay study from 2018 noted that 37% of millennials used their refunds toward car purchases. Springtime car sales will likely be livelier this year as many Americans in the market for a car will be armed with their refunds, as well as an additional stimulus check (Economic Impact Payments or EIPs). With the economy stabilizing, jobs are reappearing — as many Americans are returning to work. Hence spring is set to promise flowers, and blossoming car sales, too.
Dealerships: Get the Most Bang for Refund Bucks
Knowing that car owners overall are keeping their vehicles longer can cause some dealerships to worry about keeping revenue up. The average age of a car on the road, as of 2020, was 11.9 years old. As vehicles become more dependable, and remote jobs become more common, people will be hanging onto their new vehicles longer every year. To combat the loss in new sales, accessorizing vehicles at the dealership is one of the best ways to increase sales revenue. Accessorizing not only make consumers happier with their purchase — because it feels more personalized to their life — it also increases their trust in you and makes it easier to retain them in the service department.
Accessories are three-fold “value-add-ons” to any car:
- It personalizes a vehicle to better suit a consumer’s lifestyle and needs
- It protects their investments (i.e. seat covers, floor mats, door guards and more)
- It gives them more options for technology, which is becoming increasingly important to the main car-buying demographic
Most people, especially dealerships, eagerly awaited a better year with the start of 2021. Now with spring in the air, the climate is right for new (or newer) cars — replete with accessories — to bloom in driveways around the land.
About Insignia Group:
Insignia Group is an industry leader in accessory-selling technology, helping thousands of dealerships achieve their goals and harness revenue through accessory sales. By offering a cutting-edge 3D configurator, consultants, easily implemented software and a dedicated support team, Insignia Group is an unparalleled value for dealerships wanting to implement or expand their accessory programs.