A Lexus under the tree? Gifts give car sales a late-year lift

What's the big shortage for gift givers this Christmas season? Chicken Dance Elmo? The latest video game for X-Box?

Try bows. The giant, $150 kind that look perfectly to scale slapped on the top of a brand-new, $30,000, $50,000, even $85,000 luxury car.

"There's been a big rush on bows," marvels Lexus spokeswoman Nancy Hubbel. "We can get them a car, but getting a bow is a little tougher."

Despite an economy that's been slow to restart, auto dealers and manufacturers expect low- and zero percent financing, cash rebates, and other incentives will tempt buyers into grabbing end-of-year deals on 2002 and 2003 models.

And more than a few of those vehicles - or at least the keys to them - are going to end up under somebody's tree.

"We do special things," says Michael White, general sales manager at Jaguar of Great Neck/Roslyn on New York's Long Island. "Late at night we ... leave the car in somebody's driveway so that when they wake up in the morning, it's there."

But even if recipients don't know they might be getting a new car on Wednesday, dealers - especially luxury dealers - are banking on it. Lexus is leading the cars-as-gifts campaign, with a series of TV spots featuring unveilings of Lexuses on Christmas morning.

Bob Carter, vice president of sales and dealer development for Lexus, says he expects new-car sales for December to exceed 20,000 vehicles, along with 3,100 sales of used luxury cars. "It's a trend that always has been with us," Mr. Carter says. "It's actually very difficult to quantify, but it is happening more often."

According to dealers, gift sales account for up to 10 percent of December sales - both new and used. December traditionally has been a slow month for auto sales, dealers say, except for the week between Christmas and New Year's Day, when many workplaces are closed and buyers eye deals on model-year closeouts.

But zero-percent financing and other deals seem to be driving more preholiday business. "Incentives are much stronger, and have been applied to the new model year. That's going to push more people to buy this year ... [and] increase the number of cars that are given as gifts," predicts Paul Taylor of the National Automobile Dealers Association.

For gift givers in this rarefied strata, though, financing is often no object. "There is a lot of car giving for Christmas, mostly surprises, and the paperwork is usually a cash deal," notes Peter Leavy, floor manager for Mercedes-Benz of Fort Lauderdale, Fla. "We have four or five cars waiting upstairs for Christmas. It happens every year."

So what happens with those surprised but disappointed spouses, paramours, or offspring who open the drapes to reveal a Jaguar XK coupe in White Onyx when they really had their hearts set on Phoenix Red?

The gift giver could be out of a lot of green unless the paperwork was handled just the right way.

In many cases, dealers will sit on the paperwork for a car until a day or two after Christmas - just in case. But if the car has been registered and titled, it no longer can be sold as a new car. Instead of simply exchanging the car, the buyer is now trading it in at a big loss.

"It's a preowned car, so we have to sell it as a used car," notes Mr. Leavy. "We'll take the car back at the right money, so we don't lose."

To avoid that risk, many buyers just give a fancy key ring or model of the car, rather than the vehicle itself.

"It's almost easier to let them know beforehand what you're doing, then actually go get the color you want," advises Mr. White. "That way it's a surprise, but it's not a surprise in the driveway."