Why Holiday Car Sales Events are So Not A Big Deal (Black Friday Included)
November 2021 Update: The lessons learned in this article continue to ring true this holiday season—perhaps more so than ever, due to the global semiconductor shortage and resulting vehicle shortage.
With inventories at an all-time low, we would be extremely skeptical of any so-called Black Friday car deals in 2021. However, this doesn’t mean you still can’t shop smartly and get a better than average deal. Being an informed car shopper is more important than ever in this environment.
With Black Friday just around the corner, we’re here to remind folks that holiday sales events are, more often than not, gimmicks to get customers into dealerships. There’s little evidence to suggest that a car shopper is more likely to get a good deal simply because it’s a holiday weekend.
In general, there are two main factors that affect how much someone will pay: the discount offered by the dealership, and the incentives and programs offered by the manufacturer. Neither are affected specifically by the presence of a holiday, as we explain below.
Dealers Discount Year Round, Not Just During A “Sale”
Buying a car is different from buying most consumer goods. At Costco, for example, everybody pays the same price for a good. (Nobody tries to negotiate the price down at the checkout aisle.) When an item does go on sale, the sale is “real” in the sense that it’s available for everyone but only during a specific time period.
With cars, shoppers will often negotiate the selling price of a vehicle below the retail price. Due to the unique pressures that auto dealers face, such as sales quotas and targets from the manufacturer, dealers may be willing to cut into some or all of their profits on a car in order to move inventory.
Because consumers expect the ability to negotiate the selling price of a vehicle any time of the year, essentially every day has the potential to be a sale day.
Manufacturer Programs Vary by the Month, Not Around Holidays
Manufacturer incentives and programs also affect the final price paid, independent of the discount offered by the dealer. For example, the finance arm of the manufacturer might provide rebates and subvented money factor rates, or dealer cash tied to the sale of a vehicle, in order to help dealers sell more cars.
However, these incentives and programs are released on a monthly basis and are valid through the entire month — not just during a holiday weekend.
As Trusted Hackr @RVguy explains in a discussion on Leasehackr, “The teams at each OEM that set incentive levels don’t follow any holiday schedules, but rather look to how well their sales did last month relative to plan and adjust accordingly.”
“If the prior month was down year-over-year on the sales volume for a particular model, you can expect to see higher incentives in the current month (total generalization but true more often than not),” he adds.
So Should I Buy a Car During a Holiday Weekend or Not?
Look, it’s perfectly fine to buy a car during a holiday weekend, if it’s a convenient time for you.
Just realize that holiday extravaganza mega-sales aren’t really a thing. Incentives tied to a holiday are exceedingly rare, and if they do become available for a particular model, chances are they will be a relatively small amount. You cannot automatically assume that great deals can be had simply because of an upcoming holiday alone.
There are more influential factors that affect how much you will pay. These include:
Inventory age;
Rebates and dealer cash; and
Volume bonuses and monthly sales targets.
All of these factors could work in your favor during a holiday weekend — or on a random Tuesday afternoon in August.