For people who have spent the holidays in the U.S. watching any television, it’s a scene that could be drawn from memory: A smiling family wakes up on a snowy morning and walks outside to a winter wonderland to find a glistening new car wrapped in a giant red bow. Cue the voiceover and on-screen text announcing a few details of a holiday sales event.
As ubiquitous as these images and sounds are, it may be hard for many to imagine giving a new car as a present – especially as a holiday surprise. Is the idea of a new car as a holiday or gift an actual thing real people do? Or, is it simply a marketing fantasy?
The answer is probably a little of both.
The Car-as-Holiday-Gift Is a Relatively Recent Concept
Television ads featuring a brand new car with a big red bow may now seem like a staple of the holiday season. The advertising formula has become burned into the collective conscience of American culture – so much so that it has even been the subject of parody, as in a Saturday Night Live sketch from 2020.
But as embedded as the idea and the images associated with it have become, the concept’s roots only date back about 20 years. Luxury automaker Lexus is credited with introducing the idea in its current form in 1999, when it debuted its first ever “December to Remember” promotions.
According to the company, the campaign was a roaring success. As reported by Minnesota Public Radio’s Marketplace, Lexus said that in 1998, the year before it debuted the ad campaign, December was the company’s third-slowest month of the year. By 2000, December was the company’s top-selling month.
Car Sales Do Tend to Go Up in December
It’s not just Lexus. Based on our research, the auto industry as a whole tends to see a sales bump in the month of December.
According to the U.S. Bureau of Economic Analysis (BEA), car sales in December do tend to be higher than the monthly average for the year. Between 2005 and 2021, December auto sales were 8.28% higher than average monthly sales for the corresponding year.
According to the BEA data, increased sales in the last month of the year happened far more often than not. During that 16-year period, December car sales were higher than the monthly average in all but two years.
December Sales Are More of a Factor for Luxury Car Brands
While the auto industry may see a consistent boost in sales during December overall, it tends to be a strong month for luxury cars in specific.
According to a 2018 New York Times article, December was the best sales month for BMW, Lexus, Lincoln, and Mercedes each year from 2015 to 2018. It was also one of the best for automakers Jaguar and Cadillac. December sales accounted for as much as 14% of these brands’ annual sales.
Erick Kirks, Marketing Director for Johnson Lexus in Raleigh, NC, told Automoblog that the sales bump is real at his dealership.
“I still remember my first December to Remember eight years ago,” he says. “I was amazed at the increased level of sales activity compared to normal.”
Some People Really Do Buy Cars as Holiday Presents
Unfortunately, there just isn’t a lot of reliable data about whether people do or don’t buy cars as holiday gifts. Among the mountains of paperwork that goes with a car sale, there is no box to indicate an occasion for the purchase.
However, according to the same New York Times piece, the people who sell cars and track their sales say that a significant percentage of those December purchases are indeed made as gifts. The article states that car dealers and brand representatives claim that gift sales can account for as much as 10% of luxury car sales during the final month of the year.
Kirks says that, based on his dealership’s observations, quite a few people do buy – and receive – cars as gifts.
“We don’t track that statistically, but you would be surprised how many lucky people really do get new cars as gifts,” he says. “It’s a double-digit percentage.”
Car Prices Aren’t Always Lower in December
With the abundance of advertisements for holiday sales events at dealerships, it would be reasonable to assume that new car prices would tend to be lower than average. However, that has not consistently been the case.
Based on data from the Bureau of Labor Statistics (BLS), new car prices in December have been lower than average for the year in six out of the 12 years from 2010 to 2021. Over that same time period, the December Consumer Pricing Index (CPI) for new cars – the metric BLS uses to track price fluctuations – was actually 0.71% higher than the average for the corresponding year.
It’s important to note, however, that these are industry-wide averages across the entire country. The methods and reasoning behind how dealerships price their vehicles varies. Some brands and individual dealerships do offer discounts or other promotions in December and some don’t.
Should You Buy a Car as a Christmas Gift?
The idea of waking up a loved one on a frosty winter morning with a shiny, bow-topped new car waiting outside is certainly exciting. However, it’s probably not a good idea for most. Buying a new car is a major financial decision for almost everyone. Like all big financial decisions, it’s one that should be thoughtfully considered by all parties involved.
That’s especially true if buying a new car requires taking out a loan to do so. Car loans are extended commitments with monthly payments that put a huge dent in an individual or family’s budget for years.
In addition to the financial impact, there is also a personal aspect to consider.
“Buying a car is a process and a personal thing, so it’s usually best to leave it to the person,” says Carter Seuthe, CEO of Credit Summit Consolidation. “There’s a good chance you’ll get it wrong and the person you’re buying for won’t have the kind of vehicle they really want.”
If you do decide that conditions are right to purchase a car as a holiday gift, Seuthe suggests coordinating with the person you’re buying it for.
“Before purchasing a car as a Christmas gift, be sure you know what the person wants in a car,” says Seuthe. “Find out what features and styles that the giftee prefers so that you’re spending money on something they actually will appreciate.”
2023 Is Not an Ideal Time to Buy a Car as a Present
While buying a car as a gift for Christmas or any other holiday is not advisable for most people in most years, this year in particular is likely to be poor timing. New car prices remain at all-time highs as the automotive supply chain has yet to fully recover. Auto loan rates are also higher than they have been since the last quarter of 2011.
This means that in addition to paying a historically-high price for a new car, you’ll also have to pay far more to borrow the money to do so than at any time in the last decade. Simply put, now is just not a great time to buy a new or used car unless you have to – especially as a surprise.