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Thread: Lexus Testing No-Haggle Sales Policy

  1. #1

    Lexus Testing No-Haggle Sales Policy

    LEXUS TESTING NO HAGGLE SALES POLICY

    Lexus is introducing negotiation-free dealerships as a way to differentiate its dealer experience in a field where the competition has closed the gap in offering a premium experience, said Jeff Bracken, general manager of Toyota's Lexus luxury division.



    Bracken announced at the Center for Automotive Research Management Briefing Seminars that a dozen handpicked Lexus dealers will start a pilot project where prices for new and used cars as well as parts and service have set prices that are not subject to negotiation.


    Dealers must be willing to let customers walk away if they don't like the set price. Bracken said he expects a dip in sales and share in the short term but that should only last a couple months until customers get used to the new pricing strategy.


    The idea goes back to a two-day meeting in the winter of 2013 where the company and a small group of dealers acknowledged there are customers who don't like the dealership experience, largely because of the haggling.


    The concept of negotiation-free pricing is not revolutionary, and Bracken said there is a Toyota dealer in Phoenix who has successfully used it for 12 years with success. "So we know it can be done, even in a highly competitive market."


    Since General Motors got rid of Saturn, no automotive brand currently adopts the strategy, Bracken said.


    The dealers involved in the pilot program will meet in October and their employees will receive training from an outside firm. The program will start in the first quarter of 2016 and run all year. It will be evaluated almost weekly.
    Bracken fully expects it to be successful and roll out to more dealers in 2017. He doubts all 236 dealers will embrace it, but would be happy to see the majority switch to set pricing.


    Dealers set the price and once it is set, they are not to change it over the course of a sale. Prices can be adjusted periodically but the expectation is they remain unchanged for months at a time. Incentives are applied to the price normally.
    "The dealer has to be willing to let the customer walk away or word gets out and the model falls apart," Bracken said in an interview.


    Source


    Jerry Reynolds (aka The Car Pro) believes, based on his years in the car business, that this will be a huge failure. He says buyers will check the fixed price at these dealers, then go to another dealer, who will probably be willing to cut the price $500 to get the sale. In other words, it handicaps the fixed-price dealer by making him unable to negotiate. And I think he has a point.
    If someone blows up a school with a bomb they go after the bomber ... if someone shoots up a school they go after the gun.

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  2. #2
    Ba humbug !! It's a system that favors the timid over the bold. I'd do exactly what Reynolds said (if I wanted a Lexus), check the fixed price dealers then use that # as a floor to shop the negotiating guys.
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  3. #3
    Quote Originally Posted by MikeD View Post
    Ba humbug !! It's a system that favors the timid over the bold. I'd do exactly what Reynolds said (if I wanted a Lexus), check the fixed price dealers then use that # as a floor to shop the negotiating guys.
    As much as it would be treat not to have to haggle like at some kind of Mexican border town marketplace, the idea is fatally flawed. Lexus would have to require ALL its dealers to go fixed-price for it to work. And I suspect many of its dealers would turn in their franchise if they had to do that.
    If someone blows up a school with a bomb they go after the bomber ... if someone shoots up a school they go after the gun.

    A privilege is just a right that has been taken away by government.

    Political correctness is cowardice wrapped in a lie.
    ________________________________

    2013 Acura RDX Tech, 30% tints, hardwired Escort 8500 X50

    2011 Infiniti M56, 30% ceramic tint, hard-wired Escort 8500 X50, LED cabin and trunk lighting - traded!


  4. #4
    Quote Originally Posted by Mike_TX View Post
    As much as it would be treat not to have to haggle like at some kind of Mexican border town marketplace, the idea is fatally flawed. Lexus would have to require ALL its dealers to go fixed-price for it to work. And I suspect many of its dealers would turn in their franchise if they had to do that.
    Even if the new car has a fixed price, there's still the trade to haggle over unless you're just going to bend over & take their offer

    You could always go to the Ferrari dealer, they don't haggle
    2016 Challenger Hellcat, Max Steel/Blk - A8 trans, Navi, C Fiber Stripes
    2018 Durango R/T, Vice White/Blk, Tow, Blacktop pkg, Perf Tires
    2017 Honda Accord Touring V6, Basque Red Pearl/Ivory

    GONE:
    2003.5 G35s Caribbean Blue - Prem, Wood, Spoiler
    2009 G37 Vert Athens Blue/Bone - Prem, Sport, Nav
    2016 Mustang GT Prem, Guard/Ebony - Roush SC +++ ** Lmn Law 1200 mi
    2009 M45s Obsidian/Graphite - Sport, Tech, Adv Tech, Wood, Spoiler
    2007 Titan LE Crew Deep Water Blue
    2002 Q45s Desert Platinum

  5. #5
    Quote Originally Posted by MikeD View Post
    Even if the new car has a fixed price, there's still the trade to haggle over unless you're just going to bend over & take their offer

    You could always go to the Ferrari dealer, they don't haggle
    Yeah, the Ferrari dealer. Right.

    But you're right about the trade-in, and i think that's where the participating Lexus dealers in this trial are counting on making their pound of flesh.

    It's true that dealerships make most of their money on service and used cars. In fact, my dealer buys hundreds of used cars from auctions to supplement their trade-ins, because there's so much money to be made from used cars.
    If someone blows up a school with a bomb they go after the bomber ... if someone shoots up a school they go after the gun.

    A privilege is just a right that has been taken away by government.

    Political correctness is cowardice wrapped in a lie.
    ________________________________

    2013 Acura RDX Tech, 30% tints, hardwired Escort 8500 X50

    2011 Infiniti M56, 30% ceramic tint, hard-wired Escort 8500 X50, LED cabin and trunk lighting - traded!


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