Some analysts believe the tax cut legislation, now law, will help spur auto sales in 2018, but the jury is still out one month into 2018. The outlook is even greater for pickup sales, which is good news for General Motors as it prepares to launch the 2019 Chevrolet Silverado and 2019 GMC Sierra.
Automotive News reported last Saturday that the tax cuts could sway more consumers to purchase a new vehicle, but the effects may be varied across portions of the U.S. In high-tax areas such as New York, New Jersey and California, luxury vehicle sales could fall, but in less-taxed parts of the country, it could spur pickup truck buyers.
Business leaders believe the tax cuts will put a significant amount of more disposable income into consumers’ pockets, but others think most of the extra money will end up in savings accounts. The tax cuts should inject around $1.5 trillion into the economy over 10 years, but inflation and savings are the real unknowns. Recent market selloffs also point to increased fears of inflation amid a healthy U.S. economy.
“Will it end up in pockets of customers and will that translate into higher car sales? I think the jury is still out on that,” Peter Welch, president of the National Automobile Dealers Association, said.
A study by DealerRater showed 80 percent of respondents said the tax cuts will not change plans to purchase a new car. On the other side, 14 percent of respondents said they’re more inclined to buy or lease a new car now.
Geographically speaking, many truck buyers live in lower tax states, and with more expendable income, it could help an already strong segment boom further.