Tax Season Has Changed Over Time For Car Dealers

By Jeffrey Bellant March 11, 2019 322

 

Tax season isn’t what it used to be, thanks to changes in the way dealers do business and the way the government processes tax returns.

Chris Martin, a lease-here, pay-here dealer in Fayetville, N.C., has been in business nearly 27 years and has seen tax season change dramatically.

“About 15 to 20 years ago, you used to do the bulk of your business during tax season,” Martin said. “Now we’ve all worked hard to have it a little smoother, and not so volatile throughout the year.”

He said during the last two or three years, a month during tax season has “really been no different than a typical month.”

However, he added that his typical month is also better than what it was 10 or 15 years ago.

Martin said it used to be that money would come in the first quarter and last for a couple of months.

“Now you get surges,” he said. “For example, everyone in Fayetteville who has filed on a certain day may all get their refunds or advance tomorrow or within a two- or three-day window.

“And you can’t get all of them within a two or three day window.”

Today’s tax season only lasts a few weeks, rather than a few months.

It’s tough to stock up cars and employees quickly to deal with a surge.

Russ Norrish, general manager of Dealers Auto Auction of Las Vegas, said tax season has caused a conversation in the lanes.

“The guys I talk to, everybody’s complaining about the taxes. This is supposedly our tax season,” Norrish said in February.

“In my history – and I’ve been doing this for 42 years –so-called tax season is usually between Jan. 15 to about April 15. That’s when the market has been the strongest. This year we haven’t seen this.”

Tax season broke late this year, due to a combination of the government shutdown and new laws that look more closer at those claiming an earned income tax credit.

This changes the way dealers buy inventory, said Eric Wagner, general manager of BSC America’s Tallahassee Auto Auction.

“Generally you see dealers building up their inventory in the latter part of November and December,” he said. “But now we’ve seen an influx of sales and prices starting to rise in the last few weeks (end of February to early March).

Wagner said a dealer-consignor told him they sold a lot of cars in recent weeks, leading to more buying in the lanes.

“They have got to replace that because the tax money is still coming through,” he said. “They’ve got to replace that inventory.

Dealer Joseph Mok, general manager of GMotorcars in Arlington Heights, Ill., has seen something different.

“We have seen more tax return money in the first couple of weeks of February, for some reason, than we have in the past three or four years,” Mok said.

One challenge for independents is how aggressive new-car dealers and the subprime lenders have been with used-car customers, Martin said. That trend eats into the used-car dealer’s profits.

“The customer they used to show the door, now they’re rolling out the red carper for,” Martin said.

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Last modified on Monday, 11 March 2019 21:09