Winter Passes Fall as "Best Time to Buy" Luxury Autos
December is a good time to consider a luxury car, because that's when luxury brands like Lexus, Mercedes-Benz and Cadillac typically roll out some of their biggest discounts.
The Lexus "December to Remember" sale, with its rhyming name, big red bows and 12 years worth of consistent advertising, is the most memorable luxury-auto promotion this time of year.
Other promotions being advertised include the Mercedes-Benz Winter Event, Infiniti's "Limited Engagement," Volvo's "Get 2Gether with a Volvo" sale, "The Season of Audi," and the Cadillac "Season's Best Event." BMW's "Holiday Wish Event" applies only to used cars with a factory-backed, Certified Pre-Owned warranty.
Most of the deals run through Jan. 2, when the U.S. auto industry will close its books on 2007 sales (even though the numbers will include a couple days of 2008).
Why is December such a big month for luxury discounts? The answer is largely supply and demand, but also because of the calendar.
CLEARANCE SALES
Supply and demand dictates which specific models get the biggest discounts. Naturally, the cars and trucks that aren't selling as well get the deals. This year, any leftover 2007 models will be at the head of the clearance-sale list.
For instance, Cadillac is offering zero-percent financing on loans up to 72 months, or $1,000 cash back on the 2007 CTS model, which was replaced this fall by a totally redesigned model for the 2008 model year.
Cadillac's "Season's Best" offer is much less generous on the new 2008 model, which is selling well. In October, thanks to the new model, CTS sales were up 81 percent versus the year-ago month, to 6,586. There's no cash rebate on the 2008 model, and the lowest rate is 1.9 percent financing compared to zero-percent financing on the 2007 model. And the 1.9-percent offer only applies to a 36-month loan.
Few buyers opt for a 36-month loan, and not every buyer qualifies, because the short term makes the monthly payments high, even with the 1.9-percent interest rate. An online payment estimator for GMAC Financial Services said that with no down payment, the lowest monthly payment for the 2008 CTS model, for 36 months at 2.9 percent, would be a stiff $943. A bigger down payment would reduce that amount.
BRAGGING RIGHTS
The calendar also helps motivate the luxury brands, because bragging rights for calendar-year sales statistics are important to the car companies.
For instance, Lexus this year will almost certainly be the top-selling luxury brand in the United States for the eighth straight year, with sales of more than 300,000.
No. 2 BMW was behind by about 30,000 cars and trucks at the end of October.
But if you add BMW's Mini brand, the BMW Group is actually ahead by about 5,000 units, year to date. That makes it virtually a dead heat so far this year. Consumers may not be keeping track of these sales records, but rest assured, the car companies are.
Even without external rivals, every brand wants to sell more cars than the year before, even if it's only by one car.
Internally, they may want to outsell a key rival, or hit a specific market-share number. Car company bonuses may also be tied to specific sales targets.
SAVVY CONSUMERS
Consumers have definitely caught on that the fall and winter are the best seasons to buy a new vehicle.
In fact, in a recent survey on buyingadvice.com with more than 2,800 responses, about 50 percent said winter was the best time to buy a new vehicle, followed by the fall at 37 percent.
That's a bit of a surprise, since fall is often cited as the best time for bargains on the outgoing model year. Spring and summer were a distant third and fourth in the survey, at 9 percent and 5 percent, respectively.
Apparently, winter has caught on.
Published on Monday, December 3, 2007 - Email to a friend
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