Automakers Jump the Gun on End-of-Year Sales

No, it’s not your imagination, auto industry end-of-year clearance sales, which usually start around Thanksgiving, started unusually early this year.

Ads for “December to Remember,” for instance, the annual Lexus promotion featuring cars with a big red bow on the roof started well before Thanksgiving, which is when it usually starts.

Lexus says the national ad campaign starts Nov. 26, which is about average, and runs through Jan. 2. But where I live outside New York City, dealers must have jumped the gun, because ads plugging “December to Remember” have been running more than a week already.

General Motors barely waited for November to begin. GM kicked off its “Red Tag Sale” on Nov. 4, shortly after announcing dismal sales for the month of October.

“I know they already had the Christmas decorations up at Costco three weeks ago, so we’re at least three weeks behind them,” said Mark LaNeve, vice president, GM North America vehicle sales, service and marketing.

“The net price you pay is very close to Employee Discount for Everyone. There are very high levels of customer cash on most of our car lines,” LaNeve said in a Nov. 3 conference call.

“There will be very aggressive advertising: ‘See some red, save some green,’ in an attempt to spark the market,” he said.

Luxury brands in particular have gotten in the habit of December promotions, including the Mercedes-Benz Winter Event, the Volvo “Get 2Gether with a Volvo Season of Giving Event,” the Infiniti “Limited Engagement Winter Sales Event,” and many more.

Why December? Because the market in December is usually in need of a “spark,” as LaNeve put it. That’s especially true this year, with  U.S auto sales so poor, including luxury brands.

Luxury brands also are particularly dependent on leasing. And lease contracts are usually in 12-month increments, like 24, 36 or 48 months. That means a December sales spike tends to recur, because so many leases begin and end in December.

In addition, the car companies want to hit their sales targets for the calendar year, even if it means hitting an extra-large monthly target in December.

For traditionalists who hate to see Christmas decorations before Halloween, and who think “December to Remember” shouldn’t start before December, the outlook is for earlier and earlier ho-ho-ho-ing.