Tax refund season is heating up. Fast.

Hey, everyone. In case you missed it: We brought on a new creator to CDG. RussFlipsWhips exclusively signed with Car Dealership Guy Media, and we couldn’t be more excited to grow with America’s Most Famous Car Salesperson.

What this means for you: More free auto industry content. Simple.

Anyway, if you want to hear more about Russ’ crazy journey to 60+ million views on social media, keep reading.

—CDG

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Today’s Biggest News

Tax Season Is Majorly Weighing on the Used Market

We’re deep in tax season with just 25 days until Tax Day, which is officially when tax returns are due to the federal government…and unofficially when consumers (well, most of them) are a little more lenient with their wallets thanks to that direct deposit from Uncle Sam.

The tax refund rundown so far this year:

• As of about a week ago, the IRS had issued more than 43 million refunds to taxpayers…over $135.2 billion total.

• The average refund size is up by nearly 6% from last year to $3,145 on average so far this tax season. 

What does that mean for dealerships? Well, take a look at these chart mapping used vehicle supply, then I’ll tell you →

Used vehicle sales are ramping up, which means supply is tightening. In fact, wholesale prices are up to their 2020 levels, according to BlackBook. Retail’s not quite there yet, but the volume of listings has edged a bit lower.

You can chalk a lot of that up to tax refund season—retail sales often peak in March and April as refunds make their way into the economy. And used cars are getting the bulk of the action.

• At the beginning of March, used vehicle inventory was the lowest it’s been in six months, according to Cox.

• Total days supply at the start of March fell to 44, which is a 20% drop-off from the month before.

• Last month was the best for used car dealers since *checks notes* last tax season.

If you’re thinking, “Yossi…you just posted about the used car leasing cliff majorly impacting the auto industry,” 1) you get extra credit and 2) you’re right. Pairing this cliff with those inventory realities could get dicey.

Why? The auto industry has underproduced to the tune of about 10 million vehicles since 2020. That means fewer vehicles to sell → fewer used cars making their way back into the secondary market → (potentially) increased used car prices (again) due to a shortage of used inventory.

[Caveat: Underproduction numbers aren’t a perfect science as many people are holding on to their vehicles for longer, but even so, it’s a meaningful figure.]

That could create a more competitive used market for dealers (who might have to pay more to tap into limited inventory) and buyers (who might be forced to either pay more than they should or hold onto a clunky old model).

The one thing easing my concerns: The average used vehicle listing price was $25,151 at the beginning of this month, down 2% from the start of February and 3% from a year ago.

So what are dealers doing, knowing that we’re only about halfway through tax season (refunds usually hit within 21 days of taxpayers filing, so as late as May 6 for the procrastinators)...

First: Digging deeper into how they can promote fixed ops offerings. In a potential used inventory shortage, doubling down on parts, service lanes, and body shop deals helps ensure existing customers’ business over the lifetime of their purchase. And getting customers into stores presents one of the best opportunities for dealers to acquire vehicles during a period of lower supply.

Next: Knowing what’s selling well and making that a priority. Right now? Used vehicles priced above $35K are selling best (and are the easiest to get with a relatively high days supply of 52). Supply looks to be more constrained at lower price points.

And finally: Investing in the moment. Sales tend to taper off some heading into the summer months, so lots of dealers are making the most of a high octane sales season by focusing on upgrading customer service (a combination of focusing on the fundamentals and better tools/technologies), creative marketing (check out this Nissan dealer), and retention tactics.

This Week’s Episodes of the CDG Podcast

What does it take to become the world’s most famous car salesperson? A lot of grit, determination, and…60 million monthly views on TikTok and Instagram don’t hurt. In this episode with automotive content creator (and new CDG crew member) RussFlipsWhips, we cover the ins and outs of building a huge following on social media—and what it takes to juggle 700K followers with a full-time job in car sales. This is a fun one for sure.

When will Chinese cars come to the US? Are dealers on the hook for the potential $35 billion cost of enacting the CARS Rule? What’s good regulation and what’s overreach from the FTC? You’ve got major macro questions, and Geoff Pohanka, dealer and former NADA chair, has answers. Find ‘em here.

Listen to the episodes here, and subscribe to the CDG Podcast on Apple, Spotify, or wherever else you get your podcasts. And thank you to Private Auto, AutoFi, Auto Hauler Exchange, and CDK Global for making these episodes possible.

Together with Private Auto

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Not anymore. PrivateAuto is the first transactional marketplace that provides a fully self-service, end-to-end platform for private vehicle sales. Since it's 100% automated with proprietary banking technology, it removes the middleman, empowering both buyers and sellers to close the sale on their own, anytime.

PrivateAuto includes features like identity verification, an eBill of Sale, and instant transfer of funds. For the first time, private sales can be safe, simple, and secure.

I believe in PrivateAuto so much that I invested in the company.

Click here to list your car, and use code CDGUY to list for FREE!

In Other News

Last year, Americans bought more than 1 million fully electric vehicles…a record. But the “how many” is arguably less interesting than the “where.” This investigation from the New York Times shows where EVs are gaining steam the fastest…and it seems like we’re in a real tale of two cities.

In the Bay Area, EVs accounted for more than 30% of auto registrations. But they represented just 3% of registrations in Detroit.

Highlights from the CDG Job Board

We’ve got tons of great jobs (in addition to our own) hitting the CDG Job Board right now. Here are some standouts for anyone looking for their next move.

• Feeling amped by today’s news re: springtime sales picking up and want to uplevel your own sales career? The Taverna Collection is hiring a sales exec in Fort Lauderdale, FL (with average pay north of $125K), and Certified Auto Brokers is hiring for both a senior sales manager and a sales pro in Grand Island, NY.

• Got a background in sustainable transportation and solid business chops? EV wholesaler Plug is looking for a director of business development for its fleet ops.

Looking to hire? Add your roles today—it’s 100% free.

The Backlot

• Some good news: Cars are the most affordable they’ve been in 31 months.

• Elon Musk says the new Tesla Roadster will use SpaceX rocket tech and “maybe fly.” I’m intrigued.

• The Biden administration has eased back proposed rules that would have forced automakers to scale back production of internal combustion vehicles (or pay heavy fines).

• Fisker plans to stop producing vehicles for 6 weeks and raise up to $150 million as it fights tooth and nail to stay afloat.

Thanks for reading. Here’s something for the road: I shared all the best trade secrets that powered my early years building the CDG business with Chris Powers of the FORT Podcast. Give it a listen.

See you next week.

—CarDealershipGuy

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