All I want for Christmas is ... a brand new car? Since that probably isn’t in the cards for many of us, it begs the question: Why are we bombarded with automaker sales events every year at this time? I mean, just as everyone is ringing up holiday debt, on the heels of that barbaric day-after-Thanksgiving practice called Black Friday, the carmakers think they can convince us to drop thousands on a new vehicle?
Truth be told, even if the number of people you know who are lucky enough to actually get a new Acura, Lexus, or Dodge in their stocking can probably be counted on your fingers, this is still a really good time to buy a new vehicle. And this year's Black Friday sales actually tell us that, in fact, people are spending more, and on luxury items in particular. Some of the biggest winners in retail this seasons have been high-end department stores like Nordstrom and Saks.
On the other hand, I saw a report just last week that the use of coupons is up nearly 20 percent this year, the first time an increase like that has been seen in 17 years. Given the recent shape of the economy, it’s no surprise that consumers are looking for deals with more zeal than in recent years. The automakers version of the coupon is, of course, the incentive and there are no shortage of deals available right now, with zero-percent financing seeming to be the most popular. GM, Ford, Toyota, Nissan, VW and Mazda are all offering free financing on many models right now.
The financially savvy car buyer knows that all of the auto companies are looking to finish the year strong and keep any sales momentum they might have alive. December is historically one of the best months for new car discounts, not only because of the sales impetus, but also because dealers have to clear out their lots for the 2011 models. Even though most 2011’s have been in production since late summer, the breaking point for buying a 2010 for many buyers is the end of the calendar year. Furthermore, during this season, dealers realize that it is tough to compete with Santa in “wallet share,” so they tend to dig a bit deeper to make deals happen for those who do walk through their doors.
I can tell you from experience that the auto manufacturers will save a bit of their incentive budget so that they can "juice" the deal during that last week of the year. When a car company puts an incentive on a car, like $2,000 cash or zero-percent financing, the company gives the dealer $2,000 when it sells the car. In the case of a low APR, the cost of giving you that low financing instead of a standard rate is what the dealer is reimbursed by the auto manufacturer upon sale.
Hitting the sales goals for the calendar year make or break the car executives bonuses in many cases and they will do everything that they can to get you to buy before the year ends. Some dealers will dig into their own pockets to sweeten the auto deal with cash offers, free maintenance offers, offers for free personalization of the car, and more.So even if the big guy in red won't be dragging a new car behind his sleigh for you this year, it doesn't mean that you can't wake up to see one in your driveway Christmas morning.