Spring Car Shopping Demand May Be Smaller Due To Lower Tax Refunds

Vehicle pricing analyst firm, Black Book, believes there may be slightly lower demand for car shopping this spring due to lower tax refunds issued to Americans. Spring is typically among the busiest times of the year for car shopping since many people wait for their tax rebate check to go out and replace their aging vehicle.

Last year, the spring tax refund season was a catalyst that led to some of the strongest demand for used vehicles since the recession ended in 2010. In fact, according to Black Book, vehicles depreciated just -12.7% in 2019 compared with -14.5% in 2018. For context, average pre-recession annual depreciation on vehicles is between -15% to -18%.

From The NY Times:

The tax overhaul that took effect last year promised relief, but now that returns are being filed, some people are baffled. They’re getting smaller refunds — or sometimes having to write a check — even though nothing in their situation seems to have changed.

The average refund among early filers was down 8.4 percent, according to the Internal Revenue Service. The smaller checks, in some cases, stem from the loss of certain deductions. For others, it’s because less money is being withheld from their paychecks. The I.R.S., in trying to more closely match the amount held out of paychecks with the amount that taxpayers will owe, changed its withholding tables.

Vehicle Depreciation by Segment:

Mk/Mod			2/1/18	1/1/19	1M Chg	2/1/19	3M Chg	12M Chg
Count	Category	Seg	$	$	%	$	%	%

SUMMARY
1,572	All Vehicles		16,270	14,625	-2.9%	14,207	-7.8%	-12.7%

TYPES
855	Car		12568	11353	-3.1%	11000	-8.5%	-12.5%
717	Truck		19996	17918	-2.7%	17434	-7.4%	-12.8%

ORIGINS
180	Domestic Car		11653	10744	-3.2%	10403	-9.1%	-10.7%
319	Domestic Truck		20278	18180	-2.3%	17754	-7.3%	-12.4%
675	Import Car		13043	11668	-3.1%	11309	-8.2%	-13.3%
398	Import Truck		19572	17525	-3.3%	16953	-7.4%	-13.4%

SEGMENTS
16	Sub-Compact Luxury CUV	LXU	18482	16160	-4.2%	15488	-7.0%	-16.2%
80	Mid-Size Luxury CUV/SUV	LMU	24958	21462	-3.9%	20625	-7.6%	-17.4%
110	Compact Crossover/SUV	CSU	13771	12597	-3.7%	12129	-8.3%	-11.9%
86	Sporty Car	SPC	13834	12792	-3.7%	12324	-9.1%	-10.9%
164	Near Luxury Car	NLC	18328	15523	-3.7%	14955	-9.0%	-18.4%
18	Sub-Compact Crossover	SXU	12092	11730	-3.6%	11305	-5.9%	-6.5%
16	Small Pickup	SPT	22830	21212	-3.5%	20471	-7.9%	-10.3%
29	Minivan	MVW	17219	14521	-3.4%	14023	-10.6%	-18.6%
93	Sub-Compact Car	SBC	7141	6701	-3.4%	6474	-8.4%	-9.3%
138	Compact Car	CPC	9016	8488	-3.1%	8224	-9.5%	-8.8%
49	Full-Size Car	FSC	14138	12886	-3.1%	12489	-8.2%	-11.7%
109	Luxury Car	LLC	24220	20351	-3.1%	19726	-7.4%	-18.6%
60	Compact Luxury CUV/SUV	LCU	23367	20416	-3.0%	19812	-5.9%	-15.2%
104	Mid-Size Car	MSC	10912	10049	-2.9%	9760	-8.6%	-10.6%
53	Prestige Luxury Car	PLC	38936	33139	-2.6%	32286	-6.3%	-17.1%
94	Mid-Size Crossover/SUV	MSU	18345	16003	-2.5%	15605	-8.8%	-14.9%
21	Compact Van	MVC	11565	11225	-2.5%	10947	-5.8%	-5.3%
49	Full-Size Luxury CUV/SUV	LFU	41377	34658	-2.4%	33820	-6.9%	-18.3%
51	Full-Size Crossover/SUV	FSU	29529	25963	-2.4%	25348	-7.5%	-14.2%
59	Premium Sporty Car	PSC	41799	37236	-1.9%	36513	-5.1%	-12.6%
80	Full-Size Pickup	FPT	25967	24152	-1.6%	23760	-5.4%	-8.5%
93	Full-Size Van	FSV	18915	17654	-0.4%	17574	-3.1%	-7.1%

Spring Car Shopping Demand May Be Smaller Due To Lower Tax Refunds

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