CONTINUING A TREND OF SOFTENING PRICES C O N T I N U E D F R O M PA G E 1 2
IRS Form 8300 Reporting
Multiple Payments In some situations, the payer can arrange to pay in cash installment payments. If the first payment is more than $10,000, a business must file Form 8300 within 15 days. If the first payment is not more than $10,000, the business adds the first payment and any later payments made within one year of the first payment. When the total cash payments exceed $10,000, the business must file Form 8300 within 15 days. After a business files Form 8300, it must start a new count of cash payments received from that buyer. If a business receives more than $10,000 in additional cash payments from that buyer within a 12-month period, it must file another Form 8300 within 15 days of the payment that causes the additional payments to total more than $10,000. If a business must file Form 8300 and the same customer makes additional payments within the 15 days before the business must file Form 8300, the business can report all the payments on one form. Example: On January 10, a customer makes a cash payment of $11,000 to a business. The same customer makes additional payments on the same transaction of $4,000 on February 15, $5,000 on March 20, and $6,000 on May 12. By January 25, the business must file Form 8300 for the $11,000 payment. By May 27, the business must file another Form 8300 for the additional payments that total $15,000. Required Written Statement for Customers When a business files a Form 8300, the law requires the business to provide a written statement to each person named on Form 8300 to notify them that the business has filed the form. The statement must include the name and address of the cash recipient’s business, the name and telephone number of a contact person for the business, the total amount of reportable cash received in a 12-month period and a statement that the cash recipient is reporting the information to the IRS. The only exception to the customer’s notice requirement is when the Form 8300 was filed for suspicious activity. In that event, it is actually illegal for the business to notify the customer the Form 8300 was filed. When to Provide a Statement to the Customer The business must provide the written statement to its identified customers on or before January 31 of the year after the year in which the customer made the cash payment that caused the business to file Form 8300. A business that chooses to mail the statement must mail the statement in a timely manner to ensure the customer receives the statement by January 31. IRS Form 8300 and additional instructions can be found at www.irs.gov.
Black Book: More Used Cars Will Cause Price Drop Black Book is predicting an additional 900,000 used vehicles will hit the market in 2012 – the effect of a hot new-car market – calling the massive influx a “glaring reason” for the drop in used prices that has already begun. What’s more, if the new car market gets even hotter in 2013, used prices will fall further, the company said. Black Book cited an outside prediction putting total new vehicle sales for 2012 (retail and non-retail) at 14.2 million units, which would be an increase of 1.5 million units over last year. Black Book’s Ricky Beggs said 60 percent of those additional new vehicle sales are likely to have a trade-in attached, putting 900,000 additional used cars into the market. “Almost a million more used vehicles will be added to the industry this year as a result of more trade-ins on new car sales,” Beggs said. “This is a significant driver of lower prices, combined with additional rental cars being sold at auction and dealers preparing for the coming 2013 models.” So how big an impact does 900,000 additional used units make? Consider: Three years ago, 750,000 units were taken out of the used vehicle market thanks to the so-called “Cash for Clunkers” program, and Black Book noted, “At the time, the auto community thought that would have a profound impact on the industry. By comparison, this year the industry will be adding 900,000 vehicles into the system, which is a glaring reason why prices are falling.” Continuing a trend of softening prices, Beggs said in his June 18 report “Beggs on the Used Car Market” that the week ending June 15 showed car segment prices dipping $31 on average, with only one segment showing an increase. The downturn in truck prices was even steeper ($60). Black Book said used car prices will continue to decline “well into next year assuming 2013 SAAR increases further.” Sales Projections There are likely to be 4.43 million used sales in June, according to data from CNW Marketing Research. That would be down from 4.49 million used sales in June 2011 and up from 4.31 million in May, the firm said. CNW said the “true delivery rate” for used sales – similar to the seasonally adjusted annualized rate often used by analysts in discussing new vehicle sales – was 40.19 million in June, down from 43.58 million in May. CNW said the true delivery rate has stayed above 40 million for every month of 2012 except March, when it dropped to 38.54 million. The latest forecast from J.D. Power and Associates’ Power Information Network and LMC Automotive projected 994,800 new car retail sales in June, a 15 percent rise from June 2011 after adjusting for one more selling day in June 2012. The resulting SAAR would be 11.9 million. Analysts are expecting 1.27 million total new vehicle sales in June (retail and non-retail), which would be up 16 percent over June last year. That would translate to a total SAAR of 13.9 million. The firms said the projections for June were based on the first 17 selling days of the month. For the rest of 2012, LMC held its total new sales forecast at 14.5 million and kept its retail projection at 11.6 million. “Despite a rising level of uncertainty with the economic recovery, consumers remain resilient in their willingness to purchase new vehicles,” LMC Automotive senior vice president of forecasting Jeff Schuster said. “Concerns regarding the macro-economic environment and another potential summer slowdown have increased, but we expect the sales pace to remain strong and stable throughout the second half of the year.”
BY JOE OVERBY EDITOR, AUTO REMARKETING
BY ADR STAFF 14
DEALER
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NEWS
SEPTEMBER/OCTOBER 2012
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