Holiday Car Deals Move Earlier: 4 Things to Consider

Tom Krisher READ TIME: 3 MIN.

Lexus put the red bows atop its cars a month early, and General Motors is advertising Black Friday deals two weeks before Thanksgiving as the auto industry copies traditional retailers with holiday discounts well before the holidays.

Car buyers will reap good deals for a longer time, analysts say, as automakers battle to hold or increase their share of what likely will be record U.S. auto sales this year. Savings can run in the thousands of dollars.

"The consumer is in a great spot to get a great deal," says Tom Libby, manager of industry analysis for the IHS Automotive consulting firm.

Lexus, Toyota's luxury brand, started its sales early as it tries to catch Mercedes and BMW, which in recent years have dueled to be the top-selling U.S. luxury brand. Lexus' "December to Remember" sale offers low-mileage three-year leases of $40,000-plus cars for as little as $319 per month with about a $3,000 down payment. BMW and Mercedes have similar offers.

Geoff Pohanka, whose Washington, D.C.-area dealership chain includes a Lexus store in Virginia, said the early promotion might not boost November sales, but it should help toward year's end. "It might take a while to create some momentum for sales," he said. "In December it will really get going."

GM's Chevrolet brand started advertising Black Friday sales in Detroit last week with the slogan: "Avoid the chaos, not the deals." The brand is offering zero percent financing for six years or 20 percent off the sticker price of many 2015 models.

Holiday sales make December among the top months for auto sales because of the deals. Here are some things to consider if you're in the market:

HOW MUCH CAN I SAVE?

Depends on what you're buying. You should be able to get around 10 percent off the sticker price of a lingering 2015 model, maybe more on higher-priced large trucks and SUVs, says independent auto analyst Jesse Toprak. For example, Ford is offering more than $9,600 off the sticker price of some 2015 F-150 pickups, the nation's most popular vehicle. Lease deals are the best they've been in years because interest rates are low and resale values are high for cars coming off leases. Dealers are hungry to clear their lots of 2015 models because they don't want them sitting with big discounts next to 2016 models, Toprak says. "The old notion of 'year-end clearance sale' has some validity," he said. But Toprak cautions against buying an undesirable car with a funky paint color just because it's discounted.

WHAT MODELS ARE DISCOUNTED?

In general, automakers offer discounts on models with the highest inventory, Libby says. That means discounts on slow-selling small and midsize cars and electric and hybrid vehicles, but few deals on hot-selling small and midsize SUVs. Automakers have people who watch inventory nationwide and offer incentives when supplies grow. Sometimes promotional cash is offered to dealers rather than consumers, so it's wise to comparison shop to get the best deal, Libby says.

WHAT MODELS HAVE HIGH INVENTORIES?

Automakers measure inventory by dividing the sales rate per day into the number of vehicles on dealer lots to figure out how many days worth of cars are out there. Automakers say a 60-day supply is optimal. Last month, Toyota's rugged FJ Cruiser SUV had the highest days' supply with a staggering 644. The Mitsubishi I-Miev electric car was second at 286, followed by the Fiat 500L at 280 and the Fiat 500 at 239. Nissan's GT-R performance car rounded out the top five at 224 days, according to Ward's Automotive. An example of a resulting discount: Fiat's offer of $2,500 cash on the 500L, or 13 percent off the sticker price.

WHAT MODELS HAVE LOW INVENTORIES?

Hot-selling Subaru has the most models with the lowest supplies, so don't expect much discounting. The WRX, Impreza, XV Crosstrek, Legacy, Outback, Forester and BRZ all had 18 days worth of inventory. The Nissan XTerra SUV also had 18.

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Auto Writer Dee-Ann Durbin contributed to this report.


by Tom Krisher

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