Why Do Car Dealerships Wig Out on Presidents’ Day? Ask The Drive

Hey car dealer, go fly your freak flag.

byJohn Pearley Huffman|
Car Buying photo

Q: What’s the deal with all the Presidents' Day sales at new (and used) car dealerships? Why is this holiday so freakishly important? – Lee P. O’Faith, Brodhead, KY

A: It’s not about patriotism. It’s not about a desire to wipe out their inventory on the cheap. It’s about money. For dealers it’s always about money. After all, that’s why they’re in business. And it’s likely why you’re in your business too. So cool your jets.

The money in this case is the cash consumers have freshly laundered through the Internal Revenue Service. According to CNN Money, eight out of ten Americans expect to receive tax refunds every year. And last year the average early tax refund was $2,893. That’s not enough to buy a new or solid used car, but combine that with a trade-in and it’s a good down payment.

“Presidents' Day is just the polite way of saying your customers actually have money to spend,” explained Steven Lang, a used car dealer in the Atlanta area.

Tax season begins in mid-January when the IRS starts accepting returns for the previous year. In 2016, the first day to file your tax return was January 19; for millions of Americans with straightforward tax situations, particularly those that will result in a tax refund, it makes no sense to delay filing. And for taxpayers who file electronically, the IRS says it will issue most refund checks in less than 21 days after filing.

Count 21 days from January 19 and you’re at February 9 this leap year. Which means many consumers will have cash in hand to put down on a new car starting with, you guessed it, the three-day Presidents' Day weekend. Let’s call it a four-day weekend if you start with this Friday, February 12.

Tax refunds will keep coming through March and April and into May. They are the manna from Heaven for car sales. And Presidents' Day promotions are how dealers celebrate their arrival. This is big pool of cash—over 150 million returns were filed last year and the IRS issued 109 milion refunds worth over $306 billion. Just a fraction of that early in the tax season is a massive amount of loose cash.

Even people who are filing their taxes as late as this week can have some refund cash if they take out a loan against their refund. Which may or may not be a great idea. Yeah, a tax refund is only your own money that the U.S. Government has been sitting on. But for a lot of us, when you look down and see four figures you can spend any way you’d like, it feels like a bonanza. And some of us go out and buy a car.

Beyond that, dealers are always looking for promotional hooks to drag consumers into their showrooms. And holidays are great for that. People are in a good mood, they have the day off, they’ve paid off their Christmas bills and in February most of the country it’s too cold for barbecuing. Plus in most years Presidents' Day is the last holiday until Easter hits in April – though, yes, this year Easter is on March 27. And Easter is always on a Sunday. That’s the longest stretch between holidays in the year. So they’re going to exploit this opportunity as aggressively as they can.

Smart marketers that the dealers and manufacturers are, they’ve refined and honed the Presidents' Day sale into a juggernaut of automotive temptation. Succumb at your own risk.

Car Buying