The typical spike in sales during tax return season (February/March) has leveled off in the car audio market for the past two years, according to many industry members.
Some said the reason was delays in tax returns, others cited reasons from weather to politics.
Alpine said, “From what we’ve been told, the tax refund season started later this year due to several reasons…In general, we heard some retailers had lower business than they usually enjoy from refunds compared to prior years. Since the refunds arrived later, the money was used for other things like Spring Break vacations instead of hard goods.”
Last year, tax season lasted only about a month compared to two to four months in past years, and this year it only lasted about three weeks, according to many industry members.
Ed Dalesandro of PA-based manufacturer’s rep firm End Result, said, “When Trump got elected last year, we thought this is great. The election’s over, tax season is going to hit, we’re going to have a big bump this year. It didn’t happen again.”
He noted that spring has arrived late for the past two years and weather may play a role in the shorter buying season.
Paul Goldberg of Epsilon (Soundstream) acknowledged the slowdown since February 2017. “From our perspective, we have not seen growth this year. It’s as flat as can be. Whereas I know from a number of our competitors, they’ve seen declines in business. We’ve seen a continuation of last year. Tax season was very short last year and this year we saw a bump of about three weeks. Whereas you normally would see people coming out in mid-January to buy their products and it continuing and tapering off at the end of May or June. We only saw a two-week bump in sales this year. Last year it was a little more; three or four weeks.
Some said what used to be a 15 to 20 percent spike is now a 5 percent blip from tax returns.
Stephen Trentacoste of Trent Partners in NY said two key retailers in his territory reported that tax season was not only shorter, it just didn’t really happen.
More than one industry member said that the Trump administration’s policies on immigration have caused uncertainty among Latin Americans, who are now holding onto their savings, particularly in urban areas, affecting dealers who cater to that demographic.
But many agreed with Goldberg who said, “A lot of consumers are spending their money on other items in other categories. If you are an 18 year old and you have a choice on spending $1,000 on car audio or a brand new iPhone, I think we all know where the money is being spent.”
Still tax return policies are also playing a role. According to Yahoo Finance, those filing a paper return (versus an e-file) this year had to wait 6-8 weeks for a return. The earliest date one could file was the end of January. Plus the Fed is now taking security measures to protect against cyber fraud, which can slow a refund. You can read more on this here.
In my opinion it’s pretty simple….today more and more people get their tax refund as a direct deposit thus don’t get checks in their hand. That money goes into the checking account and bills get paid with it. This has been going on for a while and is only growing as file it yourself tax software becomes cheaper.