Some Bonus Tax Rebates Going Toward Cars

The checks aren’t in the mail yet, but consumers already know how they intend to spend the money they’ll get from President Bush’s tax rebate incentive package: on big-screen TVs, DVD players, iPhones, iPods, computers and, oh yes, maybe a car or perhaps a vacation.

Putting more electronics in the home is the No. 1 target of consumers when it comes to spending their tax rebate checks, according to a survey by CNW Marketing Research, which specializes in why people buy the vehicles they do.

The checks won’t create a stampede to dealer showrooms. Automotive spending (15%) ranks No. 4 behind buying home electronics (38%), making home improvements (22%) and paying off debt (19.5%).

When it comes to buying a new or even used vehicle, only about 20% of that automotive segment will use their tax rebate money to add to a down payment to lower their monthly payments, said Art Spinella, CNW Marketing Research general manager.

Most will use it to buy a badly needed set of radial tires or acquire accessories, from an upgraded sound system to a DVD entertainment system.

How people plan to spend the money depends on their income level, with 42% of those with income levels below $49,000 a year saying they want home electronics, yet only 29% of those with income levels of $100,000 to $150,000 will opt for home electronics.

“When you earn $150,000 a year, you already have a big flat-screen TV,” Spinella said.

Among those who earn $49,000 or less, 13% say they’ll spend the money on automotive, whether to buy tires, accessories or make repairs, which is the same percentage who say they’ll use the money to take a vacation. Among those who earn $100,000 to $150,000, only 16% will spend it on automotive.

The intent of the tax rebate package was to encourage consumers to spend money to stimulate the economy, and that’s what consumers say they’ll do.