As the holidays approach, carmakers are running those familiar holiday sales commercials — complete with falling snow and massive red bows on top of cars.
It's not just good marketing. December is, in fact, one of the biggest months of the year for auto sales as well as one of the best times to buy a car, particularly luxury vehicles. And dealerships often throw the bow in for free during the holidays.
Luxury sales throughout the year make up 12 to 13 percent of total vehicle sales, but around December that rises to 16 percent, said Thomas King, senior vice president of the data & analytics division at J.D. Power. A combination of holiday promotional deals and dealers swapping out the outgoing model year with next year's vehicles makes it a good time for buyers too.
Costa Mesa, California company King Size Bows has been making bows for Lexus commercials for years. But they also sell to local dealerships as well as individuals, and they do brisk business over the holidays, said Amber Kingaard-Hughes, who runs the company with her mother Jan Kingaard.
The company keeps bows in stock that are 41 inches long and 31 inches wide for about $50 each. They also custom make bows up to 20 feet long that can run into the thousands of dollars, she said.
The bows make it all the more festive, Kingaard-Hughes said, adding that the company just shipped several of its "Lexus-style" bows to Kenya.
During the holidays, dealerships typically throw one of their in-stock bows in with the car for free, Kingaard-Hughes said. Occasionally though, a dealership will only allow the buyer to take a photo with the bow on the car, before taking the bow back.
"Some customers haven't been too happy when that happens," she said.
Kingaard-Hughes said she once sold a bow to a woman who bought a car for her husband, a rare Corvette — his dream car. His wife refused to let him buy the car months before and then secretly purchased it and stored it. The man was despondent when he found out the car had been sold — not knowing his wife had bought it for him — until she surprised him on Christmas with the car and a King Size Bow on top.
"It is a joyous business," Kingaard-Hughes said. "This is a time when people do need joy and happiness in their lives, and the bows help bring that."
The deals also can be joyous as manufacturers make one last push to move this year's inventory off the lot. November and December are relatively light traffic months for consumer car shopping websites. Many buyers in the market for a car have typically done much of the research they had planned. But many of those sites are pulling in piles of money from manufacturers aiming to make one final push for the consumer's attention.
"I wish this fight existed all year long," said Troy Snyder, who is vice president of the Consumer Division at J.D. Power, and who runs the firm's consumer site JDPower.com. "I would be in a really good spot."
Buyers looking for the latest and greatest are shopping for brand new cars, and dealers are dropping prices on remaining old model year vehicles that manufacturers are hoping to close out.
The phenomenon is especially pronounced in the luxury market, because a very large proportion of luxury vehicles are leased. In the premium market more than 55 to 60 percent are leased rather than financed, and typically for a three-year period. Thus, consumers who took advantage of a lease around this time, are back in the market three years later.
"Then, of course, you also have the question of wouldn't it be nice to receive a new vehicle for Christmas," King said. "Pull that altogether and that is what you get is a very busy holiday season."
Even November has become a stronger month for sales than it has been in the past, said Edmunds manager of data analytics Jeremy Acevedo. "The expansion of Black Friday deals across the entire month of November, is something of a new phenomenon. It has emerged as a better than an absolute dud month."
After rising more or less steadily since the end of the recessions, incentives have fallen slightly since the middle of the year. While spending is low, there are still some really terrific deals to be had particularly on 2018 model year vehicles, King said.
This year, there are more 2018 vehicles than there typically are, Acevedo said. "That is an opportunity for shoppers to get out there."
One thing there Acevedo said he is not expecting to see is a lot of 0 percent financing deals, which hit an all-time low in October. Instead, he expects more deals that just reduce the sticker price.