DealershipsUSA

Negotiation-Free Pricing Works for World’s Largest Lexus Dealership

Lexus JM Lexus Plus

WardsAuto has an update on the Lexus Plus negotiation-free pricing program and how it’s working at JM Lexus, the brand’s largest volume dealership in the USA:

“Anybody that’s bought a car from us, I haven’t heard a discouraging word at this point,” [JM Lexus vice president and general manager Jim] Dunn tells WardsAuto in an interview. “As I tell them why we are doing this and what are the benefits for you, they understand it’s time to really do something different.”

“We see if they’re not going to have to go to five or six different dealerships anymore, and they’re really only shopping one, or up to one-and-a-half stores these days, that the consumer wants something different. And we’re listening.”

Dunn says his fellow Lexus dealers are watching and waiting, but he thinks they will opt for Lexus Plus eventually.

“The guys in my (dealer) group, they know at some point it’s going to be incumbent upon them to do the same thing,” he says.

Lexus USA vice-president of marketing Cooper Ericksen also addresses the issue of non-negotiable pricing in a large market like Southern Florida:

“(Undercutting) has happened, it will happen. But again the real value proposition comes in where ultimately a customer is going to make a decision: Is it worth it for me to go dealer-to-dealer, to call and to email and to text, and to negotiate and spend all the time to go to all these different dealers looking to save a small amount of money?”

He notes every dealer pays the same amount for a vehicle and has the same amount of profit margin, so if Lexus Plus models are pre-negotiated at market-based prices, the gap between what they can be sold for and what a buyer will pay a Lexus Plus store is small.

Meanwhile, Dunn believes JM Lexus’ “world-class service” will trump any small pricing difference between it and other South Florida Lexus dealers.

Comments
Louis Brown
This is still in a test faze and if they decide to roll this out every dealership will be on the same page.. even in NY and LA otherwise it will not work
Article (as posted by OP) states this Lexus program will NOT be mandatory.
If you look at the locations of the dealers in the LP program, all except Lexus MV are in areas where there is little to no competition from other Lexus dealers (and likely few European dealers). As pointed out, the two dealers in Nebraska are under the same ownership, so they practically control the local market per se.

With the Internet age these days, many buyers will go far out of their immediate area to purchase/lease a vehicle if they perceive it to be a better deal than their local store. Vegas comes to mind, as I've read many car buyers there will drive to SoCal to buy instead.
DarwinOSX
This is a bunch of baloney. I just bought an IS 200t F-sport at one of these dealers. They quoted me $2000 off which is easy to get at any dealer. I quoted them a TrueCar discounted price of $63000 of which they gave me. They also gave me $700 off the extended warranty which this program supposedly doesn't allow.
Lexus Plus dealers don't quote a price, it's locked in. Also, if you paid $63,000 for an IS 200t F SPORT, you paid $20,000 too much.

Which dealer did this happen at?
  • krew
  • September 20, 2016
krew [​IMG]

Lexus of Lehigh Valley owner Peter Cooper shares his experience as a Lexus Plus dealer.
View the original article post
krew
Lexus Plus dealers don't quote a price, it's locked in. Also, if you paid $63,000 for an IS 200t F SPORT, you paid $20,000 too much.

Which dealer did this happen at?
DarwinOSX may (?) have confused the F-Sport with the full-F model. 63K is more in line for a full-F.....plus, I don't think a full-F-model is even in production for the current 3Gen IS-series.
Maybe $63,000 not US dollars.
IS-SV
Maybe $63,000 not US dollars.
Interesting point. Might explain part or all of it (I didn't know Darwin X was in Canada). At today's exchange rate, 63K in U.S. currency would be 83K in Canadian, and 63K in Canadian would be 48K in U.S. dollars.
Yeah, that would make more sense as CDN$63K.
Another Lexus Plus dealer weighs in with his thoughts on the system. This time, it's Greg Grimes, vice-president of operations of the Rohrich Auto Group (which includes Rohrich Lexus in Pittsburgh, Pennsylvania) who is interviewed in WardsAuto. Here's the story:

Group of Lexus Dealers Out to Change a Thing or Two
Lexus Plus alters the traditional F&I operation that typically is a separate dealership department.

Nov 28, 2016 - Steve Finlay | WardsAuto

The Rohrich Auto Group raised its hand when Lexus sought a few good dealers to participate in a customer-oriented pilot program called Lexus Plus.

“We were so ready for it,” Greg Grimes, the Pittsburgh-based group’s vice president-operations, tells WardsAuto.

Lexus Plus aims to enhance showroom hospitality and make the buying process smoother and faster by offering no-haggle pricing and a single point of contact.

“The sales consultant, who meets you at the door or takes your phone call or Internet lead, works with you from the start to the consummation of the deal,” says Grimes.

The idea of a single dealership staffer handling a car shopper from A to Z is not new. It has been a topic of industry discussion for decades. Previous automaker attempts to implement it at dealerships have fallen short.

But automakers and dealers work more closely today, and both groups generally recognize the utmost importance of happy customers in the modern marketplace.

Eleven dealers nationwide were picked to participate in the Lexus Plus pilot program, one of a growing number of automaker initiatives to make car buying easier and quicker.

Lexus Plus alters the traditional F&I operation that typically is a separate dealership department. Lexus Plus merges it into the overall sales process.

Rohrich Auto Group consists of two Lexus stores as well as sales points for Toyota, Honda, Cadillac, Chevrolet, Mazda, Bentley and Maserati.

Founder Charlie Rohrich began as a dealer in 1938. His son Jim succeeded him, followed by his son David, the current dealer-principal.

The group became one of the nation’s original Lexus dealers in 1989. “We had a big Toyota store at the time, and David at the age of 28, after the passing of his father, had to decide whether to invest in Lexus,” Grimes says. “He chose to.”

Before joining the Rohrich group last year, Grimes worked as a regional sales manager for Toyota Financial Services, the captive finance unit for Toyota and its Lexus luxury brand.

He currently serves as a mentor for the second-annual “F&I Innovator of the Year Award,” an event put on by EFG Companies and Northwood University. The winning team will be selected next month.

He describes the mentorship as inspiring. “You can tell they take the program seriously,” he says of the students he is working with.

Q&A on How F&I Is Changing

Grimes talks to WardsAuto about F&I in general and specifically how the Rohrich group offers it to customers.

WardsAuto: Where is F&I going these days?

Grimes: It is stronger today than ever. It’s a critical profit center for any dealership, whether it is a high-volume Toyota store or an independent in the middle of nowhere.

For so many reasons, not just profitability, it is a great position for our sales associates to aspire to be in. F&I is the connector to high-productivity car sales.

WardsAuto: Some studies indicate the F&I office can be a customer pain point. How do you balance the need for F&I to be a viable profit center yet also deliver customer satisfaction?

Grimes: I’ll call it like it is. It is not a balance. It is a must. When I think of balancing, I think of compromising. The old adage is that if everything is sacred, nothing is. But in F&I, everything is sacred.

First and foremost is the customer experience. That is everything when it comes to selling or fixing a car.

The differentiating factor is the experience. Shame on us as an industry that for so long the (customer) objection has been that it takes too long to get into F&I and then takes too long once you’re there.

Our industry is wrought with management by financial statement. We have to be able to manage by customer experience. The opportunity to provide a good experience in F&I is so big. We sort of dilute it because so much is riding on it.

WardsAuto
: What can you do?

Grimes: Our auto group is at a crossroads. We raised our hands for Lexus Plus. It provides guardrails, a sales-and-pricing process and a theory on how to care for a client.

Earlier, we had started selling with upfront and clear pricing at our Cadillac and Honda stores and one of our Lexus stores, with some level of success.

Lexus helped us build the model of the single point of contact.

Maybe it is not the right model for Chevrolet or Kia stores, but (the industry) can learn something from how our clients behave in that environment and how we should behave. Dealerships can learn from the single point of contact even if they are doing the traditional sales-to-F&I turnover.

There are challenges. We have 20 sales consultants between our two Lexus stores and I have to make them (F&I) managers. I’d like to tell you I’ve completed doing that, but I’m not.

Single point of contact doesn’t have the natural, sort of psychological, breaks in the process. You have to be strategic about where you place the value of F&I products in your sales consultation.

If you have that culture on your showroom floor, then customers spend less time in the F&I office, are more comfortable with their purchases and are more likely to come back.

WardsAuto: Couldn’t that work at a Kia or Chevy store?

Grimes: Yes. I’m not saying we have to remove finance managers from every store in the country.

There are finance managers that dealerships depend on. We’ve got some great people in the industry who provide great service and profitability. They are trustworthy and work their butts off. It is a super-hard job. That job should stay in stores. We just have to evolve.

WardsAuto: Just to be clear, does Lexus Plus call for eliminating F&I managers per se?

Grimes: It’s kind of a chocolate-vs.-vanilla issue, a matter of taste. We’ve chosen to empower our management staff with additional training. One of our general sales managers this week is at a formal F&I training class. They can add supportive mechanisms to the sales process.

We’ve chosen to place contractors in a role that supports the sales staff by doing necessary paperwork, working with the bank, preparing legal documents; everything operational that happens behind the scenes, what the customer doesn’t see.

Meanwhile, our sales consultants are doing everything customer-facing, such as asking the right needs-based questions and doing the needs analysis to make sure F&I products make sense for the particular customer.

WardsAuto: Does that eliminate the F&I office?

Grimes: It doesn’t really eliminate it. At our Lexus stores, we don’t have the traditional finance manager. We have those finance contractors. It’s more sales-consultant-effort heavy and more qualitative on our management staff.

Selling value is a hard proposition. (Traditionally), you send a sales manager in to help a sales consultant. Usually what happens, he gives a little more money for your trade-in or takes a little off the purchase price of the car.

Well, that’s not the model for Lexus Plus. It’s that sales consultants have to be value-propositioning and be product gurus; people who give a darn about the customer.

It changes the game of managers who support that process, because they no longer have discounting as a crutch. They have to provide great value and experience to customers. Since we moved to Lexus Plus, our CSI scores obviously are high. It would work differently at our store in Pittsburgh vs. a store in Houston or Seattle. We’re finding our way with it, for sure.

WardsAuto: That was a good decision by David Rohrich to get one of the first Lexus franchises. Some studies rate Lexus dealerships as the highest in throughput profitability.

Grimes: I’ve worked with a lot of manufacturers. I’ve yet to find one that supports its dealer channel like Lexus and Toyota do.
http://wardsauto.com/f-i/group-lexus-dealers-out-change-thing-or-two
^ Interesting article/interview with surprising amount of honesty
IS-SV
^ Interesting article/interview with surprising amount of honesty
That was a very good read and yes very honest.
http://www.autonews.com/article/20170121/RETAIL07/301239804/penske-ends-no-haggle-pilot
Penske ends no-haggle pilot
Program at Ariz. store didn't save costs nor lift sales

Penske Automotive Group Inc. has backed off a no-haggle pricing experiment. The nation's second-largest dealership group has returned to a traditional sales model and a commission-based pay plan at Toyota of Surprise (Ariz.).

Penske made the switch in the latter half of 2016, finding the no-dicker policy did not deliver the cost savings and sales volume they had hoped, executives said.

"We failed from the standpoint of being able to grow" that business, Penske Chairman Roger Penske told Automotive News.

Since the switch, "volumes have increased, although the sample period is only a few months," Tony Pordon, executive vice president of investor relations and corporate development, wrote in an email. "We are tracking it monthly, so I want to wait for another three to six months before making any further comments about the volume."

Penske launched the no-haggle pricing pilot at Toyota of Surprise in spring 2014. It applied to new and used vehicles, trade-ins and finance and insurance products.

Penske chose that store to test the program because it had recently launched operations as an open point, so it was suitable for training new employees on no-haggle pricing.

The store paid salespeople a salary rather than a commission, believing that doing so would attract fresh talent. Many of the initial salespeople came from nonautomotive retailers such as Starbucks and Dillard's department store. They attended two months of training to handle the entire transaction from start to finish, including F&I.

Meanwhile, customers were briefed on the store's negotiation-free policy shortly after they were greeted, so they would know there was no dickering over any price, including the offer the store would make for a trade-in vehicle.

But Roger Penske said no-haggle pricing did not "lift" sales. "We didn't see the benefit of lower costs [from] having one person do the whole transaction," he said. "I think maybe our execution was poor. We had a brand-new store and a startup from scratch, so there was turnover of people."

Pordon added that the store was "losing a lot of deals" to competitors who would undercut the no-haggle price.

Penske Automotive Group ranks No. 2 on Automotive News' list of the top 150 dealership groups based in the U.S., with retail sales of 233,524 new vehicles in 2015.
While this isn't Lexus, here is one Toyota dealer where the no-haggle didn't work.
Saturn, though, proved, for years, that no-haggle pricing could work. Yes, like Scion (which also had the no-haggle system), Saturn folded, but not because of that, or any other of its noted customer-friendly features. Saturn folded because of incredibly bad management on GM's part, and the abandonment of its hugely successful plastic-bodied S-class compacts for conventional metal-bodied cloned Opel and other GM platforms. Scion folded because their products ended up competing against other similarly-sourced (but not identical) small Toyota products in the same showrooms.
mmcartalk
Saturn, though, proved, for years, that no-haggle pricing could work. Yes, like Scion (which also had the no-haggle system), Saturn folded, but not because of that, or any other of its noted customer-friendly features. Saturn folded because of incredibly bad management on GM's part, and the abandonment of its hugely successful plastic-bodied S-class compacts for conventional metal-bodied cloned Opel and other GM platforms. Scion folded because their products ended up competing against other similarly-sourced (but not identical) small Toyota products in the same showrooms.
Good point, BUT no haggle in this situation is different from either of the product starved defunct brands, as the playing field wasn't the same: A new Toyota store in a still competitive market with multiple dealers didn't work because the brand is still positioned where it still has to compete not only against other Toyota stores but also against other makes as well.
Looks like one dealer is out, since their page is blank and they're missing from the list of dealers in the program.
http://www.southcountylexusatmissionviejo.com/LearnMore_D?p=lexus-plus-program

The luxury market in Orange County and Southern California is too competitive for this program to work. There's five Lexus dealers in OC alone, and a similar amount of BMW and Mercedes dealers to shop too. A buyer here could also choose to go to LA or even San Diego to go as well.
Tragic Bronson
Looks like one dealer is out, since their page is blank and they're missing from the list of dealers in the program.
http://www.southcountylexusatmissionviejo.com/LearnMore_D?p=lexus-plus-program

The luxury market in Orange County and Southern California is too competitive for this program to work. There's five Lexus dealers in OC alone, and a similar amount of BMW and Mercedes dealers to shop too. A buyer here could also choose to go to LA or even San Diego to go as well.

Eventually, I think that the no-dicker system will grow to the point where it will not be so easy to find traditional dealerships any more. You won't be able to just hop in your car and drive a few miles if you don't like one dealer's price, and want to haggle somewhere else. We don't have that yet (I'll admit that)...but I think it is one of the inevitable long-term trends in the industry, just like downsizing, unleaded gas, and the conversion to electronic ignitions were 40 years ago
But Roger Penske said no-haggle pricing did not "lift" sales. "We didn't see the benefit of lower costs [from] having one person do the whole transaction," he said. "I think maybe our execution was poor. We had a brand-new store and a startup from scratch, so there was turnover of people."
And sales are the bottom line....
Interesting. Though I haven't seen anything firm from Lexus, KBB has a source that Lexus is going to expand the no-haggle pricing policy. I didn't start another thread on it, since we already have an old one on this subject.

https://www.kbb.com/car-news/all-the-latest/lexus-plus-no-haggle-selling-expands/2100004171/

Lexus is expanding its one-price, no negotiation selling plan to several other dealers in an effort to make the buying process faster and less stressful. Called Lexus Plus, 13 dealers have adopted or are in the process of adopting no haggle selling for new and used vehicles as well as service, parts and accessories. An additional six or seven may be operational by the end of the year.

“The car buying process has always been a little bit of a mystery and buyers walk out of the store not knowing whether they got a good deal or not,” said Greg Kitzens, Lexus general manager of future initiatives, global and dealer marketing. “But they seem to be very comfortable with Lexus Plus, knowing that they paid the same as the neighbor next door or the person that followed them in the door behind them.”

Dealers offering Lexus Plus post the car’s price on a large card attached to the car’s window. It lists the sticker price, rebate (if offered) and the Lexus Plus price that includes the discount offered by the dealer.

“All of the research we did kind of let us to believe our customers want a more streamline, a more transparent process just like they are used to when buying other goods and services,” Kitzens said.

Survey-driven program

Lexus Plus addresses surveys conducted by the auto industry that have shown shoppers hate the car-buying experience. Lexus Plus eliminates the back and forth negotiating between the sales person and the buyer, the potential anxiety, frustration and possible anger that might result during a buying transaction. One-price, no negotiation, sometimes called “no dicker sticker” selling is not new. Numerous dealers have tried that strategy over the past decades as well as the now defunct Saturn brand.

With Lexus Plus, the buyer deals with one sales associate who is trained to handle the entire process from the moment the person is greeted at the door through the financing process and right up to the instant the car is delivered and keys handed over. Lexus Plus aims to slash the time it takes to purchase or lease a vehicle by 1 to 2 hours. Since the buyer deals with one person at the sales associate level several layers of management are eliminated such as the desk, sales, finance and used car managers.

“You take some of those layers out of the process and you give more responsibility, more authority to that sales person because it is not about the back and forth with the desk or the sales manager over the price. They know the price,” Kitzens said.

Also: Kelley Blue Book Best Buy Awards of 2017

Standardized pricing

A benefit for the dealer is that it allows them to have standardized pricing: “It is not about going to war with each individual customer about the price of the vehicle and how much cross profit,” he said. However, there is a tradeoff. While Lexus Plus speeds up the buying process, cars purchased under the program likely will not be offered with the lowest price available for that model. A traditional dealer, one that negotiates on price, may have room to offer a better deal.

“We have had examples of people coming in who absolutely feel like they need to negotiate. Unfortunately we don’t sell to those people” with Lexus Plus, Kitzens said. However, “there are some on the fringe that once you explain the pricing strategy they kind of nod their head and kind of get it. The majority of people don’t like the back and forth. They don’t necessarily have to be affluent. They just want a smoother, streamlined transparency. I think that is the biggest issue.”

So far responses from customers purchasing or leasing their car through Lexus Plus have been positive. “We have this question on our survey, would you recommend this dealer to somebody else for service or sales? We are seeing a significant lift in those scores,” Kitzens said.

Lexus Plus was launched last year at 11 dealerships that volunteered to be part of the new program. One of the original points in Mission Viejo, Calif., dropped out of the program and returned to the traditional way of selling after the dealership was sold. Three dealers were added earlier this year including JM Lexus, Margate Fla., the largest Lexus dealer in the United States. JM Lexus sold nearly 8,000 new vehicles in 2016.

Also: Class of 2018 – New Cars Ready to Roll

Better customer service

Jim Dunn, vice president and general manager at JM Lexus, said Lexus Plus is about improving the customer experience. Dunne said the intent for adopting Lexus Plus is to be “the very, very best dealership in the way we treat our customers. Being No. 1 now to us is no longer enough. We want to raise the bar and that’s the right thing to do.”

Generally speaking, he said buyers have two complaints: Why does it take so long to buy or lease a vehicle, and why do they have to talk to so many people during the process such as the sales and finance managers?

Dunn believes once Lexus Plus is fully operational at the dealership, the time it takes for a transaction to be conducted will be chopped from about 3.5 hours today to 1.5 to 2 hours in the future. The dealership has just started to transition to Lexus Plus, a transition that could take six to 12 months to fully implement across all departments.

Although the average transaction takes about 3.5 hours to complete, it’s not usual for it to take even longer during the dealership’s busy months, October, November, December and January, Dunn noted.

“People are backed up. I mean they could be here for 5 hours,” Dunn said. “I hear customers say they rather do something else than go through the process of buying a car. We are listening to that now. It is important that we respect their time. Time is a customer’s most important asset. It is time for us [as dealers] to respect that.”

As for the future, the 237-dealer strong luxury division is committed to Lexus Plus and expects a higher number of participants in the coming years.

“I think once we begin to reach kind of critical mass, this is going to start catching on especially if we start to see some of the markets go for it,” Kitzens said. “We have some smaller markets with two and three dealers. If we get a couple of dealers in a (small) market going Lexus Plus that third dealer may just fall in line.”


(P.S....as an aside note, I like the no-haggle-idea myself, as long as the asking price is reasonable and includes a nice discount. But I agree that those who have a different view, or don't feel comfortable with it, or who prefer to do the deal the old fashioned haggle-way should be given that option).
C
  • C
    CIF
  • May 22, 2017
I applaud Lexus for at least trying new things, even if it hasn't worked out that well. I think putting haggling aside, the vast majority of consumers would prefer a much more straightforward and stress free dealership experience than what many dealerships currently provide. Things like inconsistent service and maintenance, hidden fees, hidden conditions, flip flopping on price despite what is written down on paper and contract, are all things most consumers hate and what gives many dealerships bad reputations and stereotypes. Direct sales from the manufacturer would be ideal, but one has to wonder what else can be done in the meantime. Tesla so far is having partial success with direct sales, but many States are vigorously fighting Tesla on the matter. If Tesla becomes more successful and influential, it will be very interesting to see what effect this has on the dealership industry in North America.

Just like Uber is currently revolutionizing/changing the taxi industry, and various start-ups and companies are now changing the real estate industry, it is possible that Tesla may end up doing the same with the dealership industry.
One thing I personally would like to see printed on each price-sticker (and why Ralph Nader, with all of the other new-car consumer-benefits he brought about over the years, didn't push for this long ago, beats me) , is to have the invoice/dealer-cost clearly printed on each price-sticker, in addition to the current figures. That can easily be done, since each new car is built to a specific set of factory/dealer figures that are in effect on the day that that vehicle is built, and those figures could easily be printed with the others.


It might look somewhat like this:

Base Price: XXXXX

Options: XXXXX

Factory Rebate: (If applicable): XXXXX

Factory Invoice / Dealer Cost: XXXXX

(The repeat-customer and military discount could be left off, since it doesn't apply to all buyers)

Manufacturer List Price: XXXXX


That would definitely make it more difficult for the dealership to play games.

And any extra charges (such as dealer-accessories or the additional markup on high-demand vehicles) would be, as they are now, on second sticker.
I would really welcome the no haggle pricing experience up here in Canada. The car buying experience would be so much better without it in my honest opinion.

http://www.autonews.com/article/20170522/RETAIL07/170519728/lexus-patient-with-fixed-price-program
Slower rollout aids transition, exec says

DALLAS — A year into the Lexus Plus no-haggle pricing program, the expected waves of dealers joining are only ripples. But brand executives say a slow and steady pace has its benefits.

“Not only are dealers learning in this process, we too as a manufacturer are learning how to better support them in this transition,” said Greg Kitzens, Lexus general manager of future initiatives.

Rather than having a dozen dealerships going through extensive training at the same time, Kitzens said, “now when you’re ready to go, we’re ready to launch you.”

Fundamental shift

Lexus Plus, which seeks to revamp the luxury dealership experience with the promise of fixed, transparent pricing and a single point of contact with customers, started with 11 dealers volunteering for the first wave last year. One dealership dropped out after being sold, and three others joined this year.

That leaves 13 stores in the program out of 237 nationwide.

That sounds low, but Kitzens says the slow uptake is understandable. After all, he says, Lexus Plus isn’t designed to be an experiment where dealers jump in and out. It represents a fundamental shift in how dealers interact with customers.

“It’s one of these things where you’ve really got to burn the ship,” Kitzens told Automotive News. “You’re not going back, and if you’ve got personnel that are used to doing business very traditionally, they may not fit into the Lexus Plus process.”

Indeed, the Lexus Plus model means changing more than just the pricing conversation in the showroom. Used cars, parts and service also carry fixed prices set by the dealer. The single-point-of-contact promise means salespeople need to be trained in finance and insurance. Vehicle sales can fall during the transition as employees and customers adjust.

Bigger shift

While several of the dealerships in the program are in out-of-the-way markets where they can take a chance on a new way of doing business, a few are in urban areas with fierce competition and less room for error.

That’s the case with JM Lexus in Margate, Fla., near Fort Lauderdale, the latest store to join.

It has been the nation’s top seller of Lexus vehicles for nearly as long as the brand has been around, including last year when it sold just under 8,000 vehicles, said Jim Dunn, general manager.

The dealership already had “ready upon arrival,” an in-house program allowing for online negotiation and quick store pickup.

But Dunn said it was time for a bigger shift, for the sake of consumers and the staff.

The store’s high volume “takes a toll on people,” he said. “It’s a toll on our customers, but mostly on our associates. We really want this dealership to reflect a culture that’s caring, that’s sensitive to what our associates need and what our buyers today are really demanding.”

One-price models have come and gone over the decades for new cars, although they are increasingly popular with used cars.

Mark Rikess, CEO of the Rikess Group consultancy, said one-price models can result in lower costs, better margins, less turnover and higher satisfaction if done correctly.

He acknowledged that many new-car dealers are resistant, especially in an up market, but predicted that would change over time, because younger generations don’t want to haggle, either as a buyer or salesperson.

Mark Rogers, a dealer consultant at the National Automobile Dealers Association, said that while he doesn’t see the industry moving to one-price quickly, it could pay off down the road for dealers that make the change.

“Lexus, with this one-price, is thinking long-term,” he said. “If they haven’t got some traction after five years, then maybe they’ll think about it, but I wouldn’t be surprised if they hung on further. They always play the long game.”
krew [​IMG]

JM Lexus in South Florida is joining the Lexus Plus program.
View the original article post
mikeavelli
JM Lexus is doing it since all they care about is volume. Push in and out. No actual attentiveness or service. Its like a wal-mart/call center.
I worled at JM for a long time and what Mike says is true. In fact they treat their associates worse than they treat their customers. A few years ago they tried another sales strategy they called 'break-it'. Break-It was developed in house not by Lexus. Then they changed all the salespeople to product specialists and their sole responsibility was to help a customer select a car, not to discuss price or payment at all. Once a demonstration and selection was made, a finance manager immediately stepped in to structure the deal and the product specialist disappeared never to really see the customer again. Then, after a deal was consummated, a third person stepped in to deliver the car. By the time the customer was finished their head was spinning. And in the likely event that the customer had a question with the technology in their car or some hiccup with the financing or paperwork they had no idea who to turn to. In that regard, the traditional sales rep makes things much easier for the customer. Remember, this is Lexus and not Toyota. It's all about personalized attention and anticipating guest's needs. That program failed and as a result they permanently lost a lot of their customers. Remember, JM Lexus is the largest volume Lexus dealer on the planet.

So now this new system, while noble in its intention of saving a customer time, will too ultimately fail because this particular dealership has forever poisoned their own well by having spent the last few years operating without a care as to profit on sales. Yes, car dealers are allowed to make a profit. The dealership will now hold a fixed price and as a result a much higher profit margin. But the typical JM customer has now been groomed by the dealership to nag and complain ( a poor yet effective negotiating strategy) until everything gets given away. Which by the way still doesn't satisfy their customers. JM Lexus has the benefit of being owned by the parent company JM Family, the largest Toyota distributor in the US. For 28 years they've been operating under the guiding principle of being the number 1 volume dealer first and foremost regardless of profit. It's what Jim Moran wanted. And it worked, they could sell more Lexus cars in a single month than some dealers sell in an entire year.

But back to Mike's point, they have developed such a bad taste in their own mouth because they always give in to the customer's each and every demand that they all end up jaded and burned out which results in an even more negative experience for the customer. To make matters worse, the company which has been on Fortune magazine's Top 100 companies to work for list for over a decade, treats the staff at the dealership like second class citizens. They cut the pay of all the grunts doing the leg work in Sales, Service, Parts and Body Shop while making huge raises to the top brass. Jim Dunn might be the worst general manager in this history of the car business. And he'd reply to that statement by saying look how many cars I've sold over the past 11 years and look how many cars we've serviced and fixed. But what he doesn't understand is that a chimpanzee could have stepped into his job and the dealership would have functioned the exact same way. All that's truly resulted in droves of people leaving that store, both customers and staff only to go to their competitors where everyone ends up having a much more positive experience.
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So....(deep breath)....I need to respond to this. My first Lexus purchase was in 2006. Over the next nine years up to 2015, I leased eight Lexus cars, six of them from this very dealer.
I am an extremely rare breed when it comes to consumer loyalty for my favored brands where I have unwavering devotion, yet it is never a symbiotic relationship.
I purposely bypassed two closer Lexus dealers between 2008 up to date for the experience at this dealer.
My devotion to Lexus has been very strong. Eight cars in nine years, two in the current fleet, total support through social media including local and international events such as the SEMA Show.
I'm no Mike Forsythe, but I'm clearly above the average owner/enthusiast in my support of the brand.
And then we come to my latest-and perhaps last-interaction with this dealer.
The "no-haggle" pricing concept is why I've never done business with CarMax.
It's not up to YOU to tell me what to pay for my next automobile, it's up to ME to decide what I'm willing to pay for my next automobile.
Lexus is blindly putting their faith into their loyal owners blindly signing up like sheep for their next car.
Based on the dominant demographic of the typical customer at this dealership, they will not accept one price pay.
It is not in their DNA to NOT haggle over the price. Big mistake.
This store lost my loyalty not only to them but to the Lexus brand over a recent experience in their service department.
Over a piece of plastic. Really.
Suffice it to say they tried to convince me: "the part doesn't really serve any purpose"; "you can go back to parts and see if they can order you one"; "we have to run it past Lexus to see if they'll warranty it"; "hey, we're doing what we can".
Two and a half hours later-on a Mother's Day when the dealership was dead, they allowed me to leave incensed at how I was treated, with nothing more than a car wash.
As I sat at a nearby Mercedes-Benz dealer contemplating my next non-Lexus purchase, this dealer finally decided to call me and advise they would replace the plastic piece in house.
Nine days later, it was. After I as subjected to a confusing, humiliating experience at the above mentioned dealer.
Their arrogance has steadily grown, and sense of service has steadily declined over the past few years.
They refused to negotiate a replacement 2017 ES350 for me a month ago, so I opted to extend my current lease direct via LFS.
I'd already decided enough is enough but this new one price no haggle policy cements my decision to not do business with this dealership any longer, in sales or service.
There has been a paradigm shift in the Lexus brand over the past few years where they have decided to ignore their most loyal customer base such as myself for their apparent pursuit of a younger hip hop loving demographic, according to their latest marketing efforts.
I don't believe the strategy will work in the long run, but I can clearly point to this specific store as being front and center in my decision to not do business with Lexus once my current contracts expire.
And they won't care one bit or notice that I'm gone.
Bulldog 1
So....(deep breath)....I need to respond to this.
Welcome back, Bulldog. :) Haven't seen you post here for months.

I don't totally agree with your view, in that I do see some merit in no-haggle pricing......but I admire you for sticking to your convictions. :) And I do agree that Lexus, along with some other luxury/premium car-makers, have lost their way by forgetting their bread-and-butter customers and going after a young, sporting crowd. Like it or not, though, the traditional people, especially the ones in the late 40s-through early-60s, in the decade or so right before retirement, are often the ones with the most money to spend on new cars. Unless they have rich parents, or are fortunate enough to get a high-paying job in their youth (most young people today aren't), those young buyers the auto companies are so eager to pursue nowadays usually don't have enough money to pursue their automotive dreams.

BTW, in case you aren't aware of it (since you've been gone for months), I myself have a new Buick Lacrosse on order......that's about as cushy and traditional as you can get nowadays. It was a tough (and I mean tough) choice between the Lacrosse, Lexus ES350, Lincoln MKZ, Genesis G80, and Kia Cadenza...but, in the end, the triple-shield won out.
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Bulldog1 and mikeavelli, I have to say I share your general concerns for sure. Not about specific dealerships you mentioned, as I have no experience with those dealerships, but about the general trend that seems to be happening with some dealerships, and possibly the Lexus brand itself. Growing arrogance, and ignoring very loyal customers are very concerning trends IMHO. If this is coming from Lexus corporate, it is very ominous then. If it is happening purely at the dealership level, still pretty bad but not quite as ominous. The question is, at what level is this happening? If only at the dealership level, is Lexus corporate aware of this, and what are they doing about it?

mikeavelli
Dealerships are hit or miss depending on management. Bad dealerships and experiences can sway people away from a brand.
That right there is a key point and what blows my mind about the entire dealership-manufacturer structure and model that currently exists. For myself personally, a really bad dealership experience makes me much less enthusiastic about a brand. Multiple bad dealership experiences from the same brand would cause me to seriously consider moving on from the brand, or only buying and also doing service and maintenance through private sales and private non-dealer shops.

I know this is a bigger problem for Toyota dealerships than for Lexus dealerships, but it ultimately speaks to the fundamentally dysfunctional and broken system we have currently.

At first I thought no-haggle pricing might help solve these traditional dealership issues, but reading more posts from you guys, it seems like for some dealerships the no-haggle pricing system might make the experience even worse for customers.

It seems like a revolutionary leap forward in how vehicles are sold to customers needs to happen more than ever.

Also all of the above is a big reason why I have developed a general aversion to dealerships.
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mikeavelli
When I bought my cars at Hennessy Lexus of Gwinnett, I didn't give 1 iota how long it took since we were very close. The experience was just a formality. We would eat, hang out, share stories, etc. Many were at my wedding. I really REALLY miss them. We never argued over price as I wanted them to eat too. One time I bought a car using a fax machine and picked it up the next day. Another time I think I spent an entire day there hanging out buying a car. THAT is how you run a dealership. Amazing people.

Customers can be bad too, some expect every deal in the book, act with an attitude, are cheap and slow to pay, then want favors and things done for them all the time. There are two sides. Going no haggle avoids those customers. "The price is the price".

South Florida dealers account for like 60% of volume for Lexus. ITs about volume, that is their business model.
Yeah I understand there are two sides. However I feel most of the problems are from good customers who are getting bad experiences. I've never been a bad customer at any dealership, even when I was being given bad service. To me it's pretty simple, in that good customers should get good service. Very loyal customers should get special service. Bad customers of course need to be dealt with in their own way. Also service should be consistent across all dealerships that represent that brand, but sadly this is far from reality. Much of this has to do with fundamentally how the dealership industry works and is structured with automakers.
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mikeavelli
I agree that something should be done for loyal or special customers. It seems to be based on the management/relationship and not automated. In Bulldogs case you would think there is a giant gold star he's bought 350k worth of cars from Lexus.

Its just good business.
Yeah exactly. Even in the current dealership system, I mean you would think that loyal customers such as Bulldog would for sure get special treatment by the dealer. Even if not, maybe observed by Lexus corporate that he is a loyal customer, and have it mandated directly from corporate down to the dealership level to offer special service and not waiver from it.
I happen to be in So FL for the week and a half, and have seen mostly those JM Lexus frames or ones from Lexus of Pembroke Pines...definitely lots of them. I see that most of Ze Germans have a presence in FLL or Pompano, particularly on Federal Hwy, but Lexus doesn't have a dealer there (and probably no one else wants to compete with JM)

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