ThunderRoad Financial is feeling “very optimistic about 2018,” and the Senate’s tax reform overhaul could boost the industry even further, said Donal Hummer Jr., the lender’s president and chief executive.
“We are seeing really strong demand and good floor traffic for dealers,” he told attendees at PowerSports Finance 2017 in late October. “Our volume is not decreasing, and it does not appear dealer volume is decreasing. … Considering what’s going on out there in market — the rumbles about tax changes, reform, and how the stock market is going — I’m actually feeling very optimistic about 2018.”
Amid the Senate’s tax bill, households with incomes below $25,000 can get an average tax cut of $40, while middle-income households — earning between $50,000 and $87,000 — can get an average tax cut of about $800, according to the Tax Policy Center’s analysis of the “Tax Cuts and Jobs Act.” For higher-income households — those whose income exceeds $750,000 — taxes would fall by an average of $28,000, the Tax Policy Center said in the analysis.
However, the Congressional Budget Office found that the Senate bill’s repeal of Obamacare’s individual mandate — which requires most Americans to purchase healthcare or else face tax penalties — would actually increase the financial burden on low-income families starting in 2019. By 2027 that burden extends to all income groups under $75,000 a year as their individual tax reductions expire under the current bill.
“If you look at some of the demographics … and who the majority of riders are — that’s middle-income America,” Hummer said.
The percentage of riders 50 years of age or older rose to 46% in 2014, compared with 25% in 2003, Tim Buche, president and chief executive of the Motorcycle Industry Council Inc., said at PowerSports Finance 2017.
The Senate’s tax bill could free up disposable income, which has been on the decline, said Brian Landau, senior vice president and automotive business lead at TransUnion, prior to seeing the details of the latest bill. In 2015, consumers only portioned 8% of their transportation expenses as disposable compared with 11% in 2000.
“If these tax reforms come into place and it starts freeing up extra cash [and] disposable income for those folks to use, I think [powersports purchases is] where it’s going to end up getting spent,” Hummer said.
Hear more from ThunderRoad Financial’s Hummer about the state of the industry in the video below — the second video in a series from PowerSports Finance 2017, held recently in Las Vegas.