That Car With Bow Is a Gift for Automakers

DETROIT (MainStreet) -- Every holiday season, Toyota trots out its Lexus commercials featuring well-off couples and families waking up on Christmas morn to a bow-topped car sitting in the driveway. Does this happen anywhere besides commercial breaks in holiday specials and bowl games?

Yes, but perhaps not as often as automakers would like.

Even during years when sales are dismal, automakers often get some nice gift-wrapped year-end holiday sales once December rolls around. Last December, auto pricing Web site TrueCar noted that vehicle prices dropped between half a percent and 2.1% from the year before, depending on the automaker, while falling 0.1% to nearly 1% from a month earlier.

Vehicle incentives, meanwhile, jumped 6.7% from November and nearly 1% since December 2009. Toyota(TM) alone increased incentives 36.5% from the previous holiday season, while Honda(HMC) beefed up its holiday giveaways by 66%. Even as vehicle sales last year sputtered to 11.6 million during the second-slowest sales year since 2008, sales jumped from 873,000 vehicles in November to 1.1 million in December.

That holiday sales total was also 11% in December 2009, which wasn't such a shabby month for car sales itself considering the circumstances. During a 2009 selling year when the industry moved a paltry 10.4 million cars off the lot and saw post-crash sales tank by 21.4%, December sales actually managed 15% improvement from 2008. That year, TrueCar found that six of the 10 best days to buy a car fell in December and provided average discounts between 6.74% and 7.25%

"Although there aren't as many 2011 vehicles as there were older model years in years past, I think the dealers that have those that are out there will be willing to let them go at a discount even if a cash incentive isn't available," says Alec Gutierrez, an analyst for automobile pricing firm Kelley Blue Book. "If consumers are looking to buy a gift for a loved one or a child in the family that just got their drivers' license or is headed off to college next year, December would be the month to do it."