A Car for Christmas? It Really Happens, With a Bow on Top

While December is usually the best month for car sales, customers require big deals along with those giant bows
Photographer: Krisztian Bocsi/Bloomberg

‘Tis the season for cheesy car commercials: Santa cruising in a red Mercedes, a tailgate of reindeer around a white Lexus crossover, an absurd promise that “there’s nothing like the holidays in a new Lincoln.” Honda, at least, is having a little fun with the corny seasonal sales bid by reprising toys from the 1980s as pitchmen. But does anyone really get a new car under Christmas tree? The short answer is yes. A five-year average ranks December as the top month for total U.S. car sales, with about one in every 10 vehicles for the year rolling off dealership lots in the final month.

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People even buy those big bows to put on their new rides, like so many handsome TV families. King Size Bows, a company based on the outskirts of Los Angeles, sells about 2,500 car toppers each year, with buyers evenly split between individual consumers and dealerships. "We get a spike on Valentine’s Day, school graduations, and of course, around Christmas," founder Lynda King says. Her company supplied the bows for the latest Lexus ads, as well as one of Oprah Winfrey's big car giveaways. "If you give someone a car and it doesn't have a bow on it," King says, "you're missing a huge piece of the experience."

At Gengras Motor Cars in Connecticut, the giant bow remains a niche: Only 5 percent of customers in December ask for it, along with home delivery. Chip Gengras, president of the Connecticut-based dealership for BMW, Jeep, and other brands, sees the number rising as automakers focus intently on year-end sales. "Every manufacturer is talking about Black Friday in a much more aggressive way than I can ever remember," he said. "It’s become a season-within-a-season." (The industry did set a brisk pace last month, thanks to discounts tied to the Thanksgiving weekend, with General Motors hailing its best November in 11 years.)

The holiday buying spree, however, isn't all about good will toward men. It’s largely driven by really good deals that are a function of how the industry makes and sells cars. In December, most dealers are clearing out the last of their current-year vehicles to make room for next year’s models. They are also scrambling to boost revenue and hit annual sales goals. Both of those dynamics add up to big discounts for drivers. In December 2013, car buyers got $2,463 in incentives on the average vehicle, almost 8 percent of the typical sticker price. Deals were slightly better only in May and June.

And lest you feel too bad about what a crummy gift-giver you are, keep in mind that a lot of the people driving around in new cars this month didn’t buy them at all—they leased them. The share of new vehicles that are leased instead of sold usually ticks up to its highest level in December. The reason? Blue-chip brands such as Lexus and Mercedes tend to pitch hardest over the holidays, and almost half of all luxury cars are leased, compared with somewhere around 23 percent for the U.S. fleet at-large.

For all the buying, however, there may not be as much shopping. CarGurus.com, a shopping website, sees a 15 percent drop in queries between Thanksgiving and Christmas. The incessant stream of TV ads are, in part, a desperate bid to get people's attention. "It really is a very good time to buy a car, because—ironically—most people aren’t looking," says CarGurus founder Langley Steinert. "Maybe the first time in your life, you should actually be listening to the ads on TV."