**This post contains affiliate links and the publisher may be compensated if you make a purchase after clicking on these links.**
As we come to the last few weeks of the year the automotive industry’s sales and marketing engine is revving close to the red line. Obviously, anyone trying to get attention in the retail business in December needs to do a lot of marketing, and also needs to be ready to make a deal – and car dealers are definitely ready to make a deal this month.
A lot of the manufacturers build off a recurring theme that they pull out of storage as the weather cools and the days get short the way people go find the wreath and holiday lights for a month or so of display. That’s why people know “A December to Remember“, “Season’s Best Event“, “The Winter Event“, and of course, “Toyotathon” – which didn’t even start as a year-end event (the first one was in May), but has moved to the end of year event because overall the manufacturers have built up the brand equity in these holiday/year-end themed marketing events, enabling them to make the most of their advertising in a busy (and expensive) time of the year to be in retail.
While the model year tends to run from early autumn to the end of summer, the industry measures performance based on the calendar year, so December is the last opportunity to outsell the rival, potentially set new sales records, or salvage an under-performing year for a brand or company. While cars and trucks aren’t actually given as gifts all that often (despite some of the commercials you’ll see), auto retailing has become like other retailing: December is 30 days of wall to wall sales and 1 day of rest.
Dealerships are where the action is at: it is the dealership’s sales efforts in the last month of the year that will make the manufacturer’s holiday/year-end marketing campaigns appear successful or wasteful, and will make the brand and its models have a good year or not. Therefore, dealerships often have volume-driven incentives available to them from the manufacturers. While these incentives often exist throughout the year for hitting certain sales goal for the month and/or quarter, December brings the opportunity to hit monthly, quarterly, and annual sales goals that can bring sizable bonuses. It means that dealers will be in the mood to deal – taking another $1,000 or even $2,000 off the selling price of the car to close the deal may yield them 5 or 10 times (or more) that much in bonuses if it’s that sale that gets them over the top. Obviously as we get closer to the end of the month the dealership is more clear on how close it is to attaining certain volume levels that will qualify it for these bonuses, and therefore the best deals can happen in that week between Christmas and New Years.
The other reason the dealership will be ready to make a deal, especially on certain new cars, is because it doesn’t want to have any “old” inventory on it’s lot after it flips the calendar. If you recall our first article about leasing a new car which is of the model year before the current calendar year, you’ll recall that dealers really don’t want to have to sell a new car that is literally “so last year”. Therefore, many of the best deals available at the dealership will be on any new 2017 vehicles the dealership is still working to sell, because while the holiday/year-end sale isn’t limited to clearance, it provides a great opportunity with so many people visiting the dealership.
There’s a few other considerations if you are considering a new vehicle before the year is over:
- 2017 may be the last year where individuals in states without a state income tax can deduct state and local sales tax off their federal income taxes. This would favor doing a vehicle purchase or a one-pay (single-pay) lease where all the sales tax is paid this year.
- If you’re considering a vehicle for business purposes, and you’ve already done some tax planning to optimize your tax liability for 2017, you may know if it’s better to complete this transaction before year-end or early in 2018. In either event, many businesses lease vehicles instead of buying them, so this may be a great time to complete your vehicle research and get that lease (or purchase) booked before the year ends.
Finally, most of these sales events are scheduled to end on January 2nd (they almost always extend 1 business day into the new year). If for whatever reason it makes more sense to complete the actual transaction in the new year (for tax or other considerations) it may still make sense to do your research now, and while you may or may not be able to hold your vehicle until the 2nd (it would be up to the selling dealer), you could at least take advantage of the manufacturer incentives and other benefits of getting the vehicle during the holiday/year-end sales event.
Next Article: “More About the One-Pay Lease”
Previous Article: “Going to an Auto Show”