Why 10% of luxury car registrations happen in December
High-end electronics, jewelry and apparel evidently aren’t the only popular gift choices consumers with the financial wherewithal to make such a purchase are selecting during the holiday shopping season.
Perhaps piggybacking off of those OEM advertisements showcasing the shiny high-line vehicle in the driveway with the big red bow attached, Experian Automotive discovered more than 10 percent of all luxury vehicle registrations between 2010 and 2014 occurred in December. The next highest month was November, at 8.8 percent.
“Every year as the holiday season nears, consumers can expect to see a number of commercials and marketing campaigns advertising incentives on luxury vehicle models,” said Brad Smith, Experian’s director of automotive market statistics.
“While some consumers may be intrigued by the seasonal deals, others may be driven by the enjoyment of attaching the big red bow to the car as a gift,” Smith continued. “Either way, December is considered — by far — to be luxury vehicle month.
“By gaining insight into the trends that drive this demand, dealers and retailers will be better positioned to manage inventory and target prospective customers,” he went on to say.
Experian also examined the demographic and credit characteristics of consumers who purchase a luxury vehicle and found that they are more affluent and a lower credit risk than the general population. Findings show that individuals who earn more than $100,000 per year are 66 percent more likely to purchase a luxury vehicle, while consumers over the age of 40 are 8 percent more likely, and men are 4 percent more likely.
Furthermore, analysts noticed the average credit score for a luxury vehicle buyer is 746, which is 36 points higher than the credit score for an average new-vehicle buyer.
Additionally, the Experian analysis found that 54 percent of consumers who purchase a luxury vehicle do so with a lease, while 30 percent take out a loan and 16 percent pay in cash.
“Given the increased price for luxury vehicles compared with other vehicle segments, it’s understandable that the average buyer has a more affluent background,” said Melinda Zabritski, Experian’s senior director of automotive finance.
“That being said, it’s clear that these consumers still are exploring ways to keep their monthly payments low,” Zabritski continued. “By choosing to lease vehicles, consumers are able to lower their monthly payments by more than $160 a month.”
Findings from the analysis also show that the top five luxury brands are:
— Lexus: 18.2 percent
— Mercedes-Benz: 17 percent
— BMW: 16.4 percent
— Acura: 9.5 percent
— Audi: 9.5 percent.
At the model level, Experian highlighted the top five are:
— Lexus RX 350: 5.1 percent
— Mercedes-Benz C Class: 4.1 percent
— BMW 3 Series: 4 percent
— Acura MDX: 3.2 percent
— Lexus ES 350: 2.9 percent
Experian closed the topic by mentioning a half dozen other findings for its analysis, including:
• The average loan amount for a luxury vehicle is $42,876, nearly $14,000 higher than the average new vehicle loan amount.
• During the third quarter of 2015, the average monthly payment for a luxury vehicle was $755, approximately $273 higher than the overall average monthly payment for a new vehicle.
• Tesla has the highest average monthly payment for luxury vehicles at $1,285, while Acura has the lowest, at $605.
• The average monthly lease payment for a luxury vehicle is $592, approximately $194 higher than the average new vehicle monthly lease payment.
• The average interest rate for a luxury vehicle is 3.1 percent, compared with 4.6 percent across all vehicle segments.
• Sport utility vehicles are the top luxury vehicle body style (46.4 percent), followed by sedans (41.8 percent) and coupés (6.5 percent).
You know what else is quite popular in December? Certified pre-owned cars, which may be another strong option for your customers.