Cars don't fit under the typical Christmas tree, but a holiday buying surge could make December the biggest month in a big year for the auto industry.
Heavy advertising and discounts could launch U.S. auto sales this month above the 1.5 million sold in August, the top month so far this year, said Jessica Caldwell, an analyst with car shopping website Edmunds.com.
The December car sales frenzy is a new phenomenon.
"Prior to the recession, December was very average," Caldwell said. "But since then it has been among the best months of the year. Automakers are playing into it by spending heavily on advertising."
But how good the deals are really depends on what you are buying, Caldwell said.
Luxury brands such as Mercedes-Benz, BMW and Lexus all offer good year-end deals as they fight for bragging rights of the top-selling premium brand in America.
Leftover 2013 models carry some of the biggest discounts, said Alec Gutierrez, an analyst at car price information company Kelley Blue Book.
General Motors is offering $3,000 in rebates from the sticker price of its 2013 Chevrolet Malibu family sedan. Ford is pitching up to $8,500 in rebates for the 2013 F-150 pickup truck XLT trim level.
Although it is several months into the 2014 model year, 2013s still account for almost 25% of the 3 million vehicles on dealer lots, Gutierrez said.
Auto shopping website TrueCar.com said that the average transaction price on the 2013 Chevrolet Corvette convertible in the 3LT trim level is $58,024 — more than $6,200 less than the sticker price. That's not surprising given the introduction of an overhauled 2014 model.
The 2013 Kia Optima LX sedan is selling for an average of about $20,175, about 10% off its suggested retail price, TrueCar said. Some models of the Ford Explorer and Honda Pilot SUVs also are selling at about a 10% discount, TrueCar said.
2014 model year cars also can carry some hefty incentives.
Honda Accord buyers, for example, have an opportunity to score a big discount close to the end of the month, Gutierrez said. Dealers will get a $3,000 payment from the automaker for every extra car they sell this month over last December, Gutierrez said, and buyers should be able to tap into that.
"December is the perfect storm for these discounts," Gutierrez said. "Dealers and manufacturers are all trying to hit their month-end target, their quarterly target and their year-end sales targets."
Nonetheless, August is actually the best month to buy a car based on closed sales data, said Larry Dominique, president of ALG, a TrueCar subsidiary that researches the resale values in car lease transactions.
The average August transaction price is about $150 lower than December's, he said, as manufacturers discount to make room for new model year vehicles.
"There is just the perception that the year-end sales are the best," Dominique said.
Years ago, the auto industry pretty much shrugged off December.
Carmakers believed that "you couldn't compete with Santa Claus," he said. "But with things like Black Friday and Cyber Monday — the reinvention of buying things, the manufacturers have found they could."
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