Car dealers use upcoming tax increases to woo customers

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Car dealers are always saying that now is the time to buy. For the next week or so, they may be right. An imminent tax break, tax hike, and fee increase mean you could save hundreds of dollars if you're in a position to buy. KPCC's Brian Watt says dealers are promoting all this to get customers into the showroom - and cars off the lot - now.

Brian Watt: This TV commercial for Toyota gets straight to the point.

Toyota commercial: Beat the April 1st sales tax increase. Save now before it's too late.

Watt: Norris Bishton owns two Toyota dealerships and four others in the Southland.

Norris Bishton: This is an opportunity for the buyer to benefit. We jump on it.

Toyota commercial: So why pay more sales tax in April when you can pay less today?

Watt: The message is also in an e-mail Bishton's Airport Marina Honda dealership in Los Angeles sent to thousands of potential car shoppers. The subject line read "Stimulus Opportunity" – but the first three words in the message were "Shoulda, Woulda, Coulda."

The economic stimulus package gives many car buyers a tax break this year – a deduction of any sales tax paid on a new set of wheels. Lyndon Bull is a sales manager at Airport Marina Honda.

Lyndon Bull: Don't let it pass you by and then you sit there and say you should've. Or you could've. So why not take advantage?

Watt: To take full advantage of Uncle Sam's attempt at jumpstarting car sales, Californians need to hit the gas. That 1 percent sales tax increase coming in April will cost you an extra 10 dollars per thousand. So on a $20,000 dollar car, you'll pay another $200 in state sales tax – 300 if the car's selling for 30,000.

Then on May 19th, the California Department of Motor Vehicles will start charging an extra 150 bucks to register that new car. The total may not sound like a lot, but Lyndon Bull says for customers who are struggling to get OK'd for a decent car loan, it is.

Bull: Especially on the down payment part of it, when the customer's sitting in the box and we're ready to make a deal and they only have a thousand to put down, you know, that extra 400 to 500 dollars is a big pinch.

So we help out most of the time. It's like, "Give me 500 now and give me the other 500 later so we can make this deal before the deadline."

Watt: Even for those who aren't struggling, the "deadline" has been motivating. Animator Ron Clements of Northridge was attached to his 18-year-old Lexus – but it had more 200,000 miles on it.

Ron Clements: I had been thinking about getting a new car probably for about two years and my wife has been bugging me to get a new car.

Watt: His wife and their accountant let him know about the coming hikes in the sales tax and vehicle registration fee. That convinced Clements to buy a new Lexus last weekend.

Clements: I needed a push, I think. I needed a push, and this was the thing that pushed me.

Watt: At $69,000, the new car would have cost Clements an extra $690 after April 1st, and an extra $350 to register after May 19th – $1,040 saved. That's a lot of "Shoulda, Woulda, Coulda."