Tax Planning for Used Car Dealers

Written by Joel Kennedy. Posted in Used Car

As we do every year around this time, we are all getting ready for tax season. Aside from the obvious business and personal stresses that surround this activity, tax season can represent a tremendous opportunity for the used car dealer. Here’s why:
Faster cash to the consumer
Tax preparation, already a huge seasonal business, has grown astronomically thanks to instant tax returns that are covered by the tax preparation companies. What this means is that as soon as 1099 wage earners get around to going to the tax preparer (as soon as Jan 1st) they can be walking out the door with cash. W-2 wage earners will have to wait until they get their W-2 form from their employers, but can also cash out sooner as well. These two waves of potential consumers will have cash that they can use to make down payments or to pay down existing auto loans. The key is getting your message in front of them!
Opportunity to market
There are two primary groups that dealers should market to this time of year: current customers and potential customers. Current BHPH customers should be marketed to via mail and telephone as to the value associated with paying down their loans, while current customers, financed through other banks, are great candidates for follow-up calls and email campaigns to see if they are in the market for a trade-in/trade-up.
Marketing to new customers based on lists that are stratified by target segment and geography can provide dealers with a measurable lift in sales during this period. Messaging will be similar to that of existing customers, with the caveat that mail campaigns would probably outperform a call campaign. Messaging can be basic enough to also attract the population that file their own taxes and wait for the check in the mail.
Dealer benefits
As a dealer, use this event as an opportunity to take a step back and examine what worked in ’09 and what you want to change in ’10. Do you want to enter into or increase your BHPH business? Do you want to increase cash sales? Do you have inventory that doesn’t match your customer base that you want to liquidate? When putting together your marketing plan around tax refunds, be sure to make sure that the revenue that that you are pulling from your efforts helps you towards a grander goal than just “doing more deals.”
Joel Kennedy is EVP / COO and co-founder of Pelican Resource Group, LLC (, an innovative lending and servicing partner currently operating in the Mid-Atlantic region. For more information please call 866-989-9688 x702.