It's Truly a December to Remember for Auto Business
The notion of cars as holiday gifts sprang from the imagination of an ad agency more than a decade ago. But in recent years, many of the industry's marketing minds have enthusiastically embraced it -- and so have car buyers.
Together, they have helped turn December, once a sleepy month for U.S. auto sales, into one of the top selling periods, year after year, according to Automotive News.
December is projected to be 2014's fourth-best month for new-vehicle sales, quite a feat since this December has only four sales weekends rather than five. TrueCar is forecasting December industry sales of just more than 1.5 million light vehicles, which would place this month behind May's 1.61 million, August's 1.59 million and March's 1.54 million -- all of them considered key months for auto sales.
"We now see sales congregating around three epic selling seasons," said John Krafcik, TrueCar's president. The first occurs in March and late spring, and the second quickly follows in the summer.
"The period that stretches from Black Friday to New Year's has emerged as the third blockbuster period," Mr. Krafcik said.
Marketing and year-end deals
This pattern of heavy selling in the final weeks of the year, when shoppers were traditionally camped out at the mall, is largely a result of automaker marketing and increasing emphasis on year-end deals as automakers compete for sales bragging rights.
In 2000 and 2001, December was just the 10th-best month of the year (January is almost always last), but a shift was afoot. Lexus had started its "December to Remember" ad campaign in 1998, and it got noticed. By 2000, Lexus had passed Mercedes-Benz to become the industry's top-selling luxury brand, and its December bonanza was a big reason why: Lexus was regularly selling more cars in December than any other month.
Mercedes and BMW then began year-end events of their own, and the volume brands soon followed. The idea of giving a car as a Christmas gift went from being an ad agency conceit to a regular occurrence: Plenty of dealers started delivering cars with big red bows on top.
Now, the whole industry tends to gear up for big December sales events, said John Mendel, exec VP-sales for American Honda.
"December is going to be really strong for us," Mr. Mendel said. These days, "there are two months you can always count on: One is August and the other is December," he added.
Well, maybe not always. Automakers and dealers that bet heavily on December face one key risk: Mother Nature. Whether it's in the import and luxury markets of the Northeast, Texas truck territory, or the Detroit 3 strongholds in the Midwest, bad winter weather can clog dealer lots and kill the shopping mood.
Case in point: 2013. After the industrywide meltdown in 2008, December finished as the best or second-best sales month in each of the next four years. Last year, however, the month started with record low temperatures in the West, ice storms in Texas and heavy snow in the Northeast and Upper Midwest. December ended up as the fifth-best month for auto sales.
Mr. Krafcik noted that carmakers increasingly are trying to turn the post-Thanksgiving, Black Friday retail craze -- which usually focuses on TV and electronics deals -- into a car-buying event and are tying it into their Christmas-themed marketing.
This year, Lexus launched its December to Remember commercials a week before Thanksgiving. Buick ran humorous Black Friday promotions.
Year-end sales also give automakers a second shot at moving out older model year vehicles still hanging around after the August clearance sales, and a chance to promote new 2015 cars and trucks. Now, Ford has its aluminum-body F-150 to promote, and Mercedes is pushing its 2015 C class, Toyota the heavily re-engineered Camry and Honda its hot-selling new CR-V.
With some brands, it's easy for consumers to find deals. Take Volkswagen: This month, it is running a "sign and drive" event offering new wheels for no money down, no first-month payment and no security deposit.
Jeff Williams, owner of Williams Auto World, a Volkswagen-Audi-Subaru dealership in Lansing, Mich., said, "We are going to do a lot of business this month -- a lot."
Neal Boudette is a writer for Automotive News