Receiving a tax refund can provide the perfect opportunity to invest in a car. In an effort to gain information about consumers’ car-buying habits, AutoNation surveyed more than 2,000 millennials to find out details about the vehicles they might spend their tax return money on.
Commercials for cars increase during tax season, amid anticipation of the extra money that consumers will soon have to spend. How much money do millennials expect to receive from their tax refunds? The study found that approximately 26 percent of respondents expect to get between $1,000 and $2,499, while 10 percent expect $2,500 to $4,999. Only 5 percent are anticipating receiving $5,000 or more, while 21 percent expect to receive between $500 to $999. Just a small number of respondents (3 percent) anticipate owing money to the government. Clearly, a high percentage of millennials expect to receive a large enough tax refund to significantly help with the purchase of a vehicle.
When it comes to the details of how they would spend their money if they decide to put their refunds toward a vehicle, approximately 75 percent of respondents said they would buy a used car, while about 25 percent plan to buy a new vehicle.
Whether they are buying a new or used vehicle, more than half of the millennials surveyed said they would buy a Toyota, Honda or Ford. For potential used car purchases under $10,000, Hondas and Toyotas ranked as the top choices, while approximately 10 percent of respondents expect to keep their purchase of a used Ford to under $10,000 as well. Honda was found to be the top choice for millennials who are planning to buy a new car that costs between $15,000 and $20,000.
Statistics indicate retail sales increase during tax season. Data from the National Retail Federation shows that more than 13 percent of Americans spend their refunds on large purchases, including cars. When asked how much they will spend on each auto brand if they choose to use their tax refund to purchase a vehicle, survey respondents said they would spend the least on a Cadillac, Chrysler or BMW, and the most on a Mercedes-Benz, Volvo or Mazda. The top brands in the middle price points included Volvo, Acura, GMC and MINI.
Although a multitude of brands spend massive amounts of advertising dollars to inform customers about their latest offerings, the survey found that millennials are most loyal to the following three brands: Toyota, Honda and Ford. When analyzed by region, AutoNation found that Honda dominates the Northeast and South, while Toyota is the go-to brand in the West. Ford, which is the only American automaker on the list, was found to be the top brand in the Midwest.
Based on AutoNation’s survey, it seems that millennials on average are expecting a large enough tax refund to substantially help with the purchase of a car, however, whether or not a large percentage of them will actually put the money toward a vehicle purchase remains uncertain.
