Lexus Plus Negotiation-Free Pricing at USA Dealerships

[Tragic Bronson]

http://www.autonews.com/article/201...ealership-cultivates-nontraditional-workforce

'Hire attitude,' and teach the rest
Dealership cultivates nontraditional workforce

When Lexus of Bellevue went all in on the one-price model it had been moving toward for years, it also modernized its hiring model for a sales experience worthy of the Internet age.

That meant not only pursuing a younger and more diverse staff, but also adjusting to a retail environment shaped by Amazon and Nordstrom in terms of customer expectations.

"Mostly I want to hire attitude, because I think the rest is all something that you can teach somebody," said Erika Olson, the Seattle-area dealership's 32-year-old sales director.

That means a lot of training — including on Sundays — and rewarding team players, who are often difficult to find in the traditionally cutthroat environment of car sales.

During the interview process, she said, "I've met a lot of salespeople who say, 'Well I pulled 20 cars last month,' and you ask them how their dealership did and they either a) don't know or b) really just don't care."

"Most of our salespeople want to win within their own metrics but also really want to see the dealership win," she said.

Lexus of Bellevue has advantages over traditional dealerships in attracting workers uncomfortable with the hard sell.

As part of the Lexus Plus program it signed up for a year ago, everything in the dealership is on a one-price model, and each customer deals with one salesperson from when they walk in the door all the way through the F&I process.

General Manager Jason Vena, 37, said the dealership started moving toward a limited one-price strategy with no separate finance manager about four years ago, before adopting the full Lexus Plus program.

"This is about the customer experience and the employee experience, and they are synonymous," Vena said. "The employee has the same fears coming into work at a car dealership as the customer has buying at a car dealership. If you can treat your employee like you treat your customers, I think you can create a better environment."

That means creating a level of flexibility not usually associated with the long hours and aggressive haggling at traditional dealerships.

"What we started to notice with some of these salespeople is when they were in front of customers, they were very successful because they had a very genuine outlook about selling cars," he said.

"The personality trait they didn't have is they weren't necessarily concerned if they sold five cars or 10 cars," he said. "Their budget needs were maybe different than the traditional car salesperson. Their work/life mix was maybe a little bit different."

Vena said that if a salesperson at his dealership is selling at 40 percent of customer encounters and hitting other metrics, they're basically OK.

The payoff for that nontraditional attitude is getting nontraditional salespeople: younger, more educated and more diverse. They range in age from 19 to 69.

And the bottom line is that the new approach is working at the store, which moves about 200 new cars a month. Some salespeople sell four or five vehicles, others sell 15 or 20.

The dealership has its highest customer satisfaction scores in 25 years, has about doubled average F&I revenue per vehicle and bumped used-car sales to 120 cars a month from about 90 a month last year, Vena said.

"We're not kidding ourselves here," said Vena. "Not many of the kids I grew up with said, 'I want to be in the car business when I grow up.' Nor did I. So we're cultivating a group of people that had no intent to be in this business."

 

[Bulldog 1]

Interesting conversation at work today. One of my co-workers has a family member who works at J.M. Family Enterprises who own J.M. Lexus among other automobile related businesses and the message conveyed was under the leadership of the late namesake founder Jim Moran, the company was all about service and treating its customers and associates the right way. Upon his passing, his children took over the business and allegedly the business model moved away from service and customer satisfaction to one of The Pursuit of Profit above all else vs. the former Lexus corporate branded Pursuit of Perfection. One of my vehicles is there now recovering from body damages sustained during Hurricane Irma. Never set foot in the showroom. Their upcoming plans include gutting the body shop and replacing that space with an all inclusive 6-story garage to house the new and used car inventories.
As a post script, I did eventually send that meticulously crafted three page letter to the Vice President of Customer Experience for Lexus in Torrance, CA.
One of her minions called me up and over the course of an hour conversation, feigned taking notes but at no time offered anything material other than her heartfelt apology from the person who sits atop Lexus customer service. I'm driving an Audi Q5 right now as my luxury rental, so I'm getting a little taste of the German side of life for two weeks. We'll see how much it sways my opinion of German cars. Meanwhile, thanks to Hurricane Irma, the Miami International Auto Show was cancelled for the first time in 47 years and I will have no exposure to the 2018's.
No Lexus dealer anywhere that I'm aware of has any 2018's in stock save for the unattainable LC. Nearly October and Lexus continues to hawk leftover 2017's at full asking price, full inception fees upwards of $6,000. The depreciation alone on a 2017 should have reduced the 2017's to a sign and drive by now. Either way, I've got some interesting decisions to make regarding my future transportation in the next few months. Stay tuned...

 

[mmcartalk]

Interesting conversation at work today. One of my co-workers has a family member who works at J.M. Family Enterprises who own J.M. Lexus among other automobile related businesses and the message conveyed was under the leadership of the late namesake founder Jim Moran, the company was all about service and treating its customers and associates the right way. Upon his passing, his children took over the business and allegedly the business model moved away from service and customer satisfaction to one of The Pursuit of Profit above all else vs. the former Lexus corporate branded Pursuit of Perfection. One of my vehicles is there now recovering from body damages sustained during Hurricane Irma. Never set foot in the showroom. Their upcoming plans include gutting the body shop and replacing that space with an all inclusive 6-story garage to house the new and used car inventories.
As a post script, I did eventually send that meticulously crafted three page letter to the Vice President of Customer Experience for Lexus in Torrance, CA.
One of her minions called me up and over the course of an hour conversation, feigned taking notes but at no time offered anything material other than her heartfelt apology from the person who sits atop Lexus customer service. I'm driving an Audi Q5 right now as my luxury rental, so I'm getting a little taste of the German side of life for two weeks. We'll see how much it sways my opinion of German cars. Meanwhile, thanks to Hurricane Irma, the Miami International Auto Show was cancelled for the first time in 47 years and I will have no exposure to the 2018's.
No Lexus dealer anywhere that I'm aware of has any 2018's in stock save for the unattainable LC. Nearly October and Lexus continues to hawk leftover 2017's at full asking price, full inception fees upwards of $6,000. The depreciation alone on a 2017 should have reduced the 2017's to a sign and drive by now. Either way, I've got some interesting decisions to make regarding my future transportation in the next few months. Stay tuned...

Welcome back....looks like you've been on a leave of absence. Sorry to year that your Lexus took damage with Irma, but you certainly weren't alone. Audi makes some nice vehicles.......if you like the Q5 (or any other Audi product), I wouldn't think twice about getting one as my daily driver, as their (former) unreliability has sharply improved in the last few years. Me, though, I'm more or less addicted to the way that my Grandpa Buick Lacrosse drives....smooth and quiet.

 

[spwolf]

Interesting conversation at work today. One of my co-workers has a family member who works at J.M. Family Enterprises who own J.M. Lexus among other automobile related businesses and the message conveyed was under the leadership of the late namesake founder Jim Moran, the company was all about service and treating its customers and associates the right way. Upon his passing, his children took over the business and allegedly the business model moved away from service and customer satisfaction to one of The Pursuit of Profit above all else vs. the former Lexus corporate branded Pursuit of Perfection. One of my vehicles is there now recovering from body damages sustained during Hurricane Irma. Never set foot in the showroom. Their upcoming plans include gutting the body shop and replacing that space with an all inclusive 6-story garage to house the new and used car inventories.
As a post script, I did eventually send that meticulously crafted three page letter to the Vice President of Customer Experience for Lexus in Torrance, CA.
One of her minions called me up and over the course of an hour conversation, feigned taking notes but at no time offered anything material other than her heartfelt apology from the person who sits atop Lexus customer service. I'm driving an Audi Q5 right now as my luxury rental, so I'm getting a little taste of the German side of life for two weeks. We'll see how much it sways my opinion of German cars. Meanwhile, thanks to Hurricane Irma, the Miami International Auto Show was cancelled for the first time in 47 years and I will have no exposure to the 2018's.
No Lexus dealer anywhere that I'm aware of has any 2018's in stock save for the unattainable LC. Nearly October and Lexus continues to hawk leftover 2017's at full asking price, full inception fees upwards of $6,000. The depreciation alone on a 2017 should have reduced the 2017's to a sign and drive by now. Either way, I've got some interesting decisions to make regarding my future transportation in the next few months. Stay tuned...

so what was the problem with JM and Lexus?

As to the 2018 availability, they are just arriving.

Sorry to hear about your car!

 

[Ian Schmidt]

One of my co-workers has a family member who works at J.M. Family Enterprises who own J.M. Lexus among other automobile related businesses and the message conveyed was under the leadership of the late namesake founder Jim Moran, the company was all about service and treating its customers and associates the right way. Upon his passing, his children took over the business and allegedly the business model moved away from service and customer satisfaction to one of The Pursuit of Profit above all else vs. the former Lexus corporate branded Pursuit of Perfection.

That's unfortunately pretty much the oldest story in business. Sometimes the founder's kids do right by the business and its customers, but in more cases it seems like they run everything into the ground.

 

[mmcartalk]

That's unfortunately pretty much the oldest story in business. Sometimes the founder's kids do right by the business and its customers, but in more cases it seems like they run everything into the ground.

That's also because, while admittedly not always the case by any means, younger people, often, simply don't have the same work-ethic their parents and grandparents did.

One of the best examples I can think of is Paris Hilton, the Queen of Partying. She is (or, at least, was) the heiress to one of the largest hotel-chains in the world. Can you just imagine her trying to run a business that size?

 

[Bulldog 1]

Received today, generic email from the stealership signed by the General Manager. It's a good thing I took both of my cars to Lexus of North Miami this weekend for the complimentary oil changes so I can familiarize myself with whom I most likely will be doing business with from now on.

Dear Guests, Friends, Family & Associates,

As a valued member of the JM Lexus family, I wanted to share with you some exciting news. On November 1, 2017, JM Lexus will officially launch a new customer experience, Lexus Plus.

​

JM Lexus will be the first Lexus dealership in Florida offering Lexus Plus. You have been accustomed to the exceptional customer service offered to all of our guests at JM Lexus, and now your luxury vehicle experience just got better.

JM Lexus will offer every guest a dedicated consultant, from start to finish. If you are purchasing a vehicle, new or pre-owned, or in our service department, you can expect a personalized experience faster and easier, while being considerate of your time.

Our negotiation free prices on all vehicles and in service will be fair and competitive. There will be no dealer fees, no marked up or hidden fees and all prices will be clearly marked.

We will also offer all our guests a 72 hour/less than 300 miles no questions asked return policy. In addition, we will make you a written offer to buy your car, even if you don't buy ours.

In addition to our process change, we will be making some physical changes at the dealership to continue to provide you with the luxury experience you expect with Lexus. Please pardon our dust over the next few months as we work to elevate both our sales and service experience.

Becoming a Lexus Plus dealer was a big decision for us and we have been preparing for this for months. We look forward to giving you the world-class experience you have come to know at JM Lexus when either servicing or purchasing.

Sincerely,

Xxx Xxxx

VP and General Manager JM Lexus

 

[spwolf]

To my understanding, no haggle pricing did not mean MSRP prices

 

[Ian Schmidt]

Yeah, I think my reaction to no-haggle would depend on how good said fixed price actually was. There are, by all accounts, much better reasons to avoid JM Lexus.

 

[krew]

Received today, generic email from the stealership signed by the General Manager. It's a good thing I took both of my cars to Lexus of North Miami this weekend for the complimentary oil changes so I can familiarize myself with whom I most likely will be doing business with from now on.

I think this thread shows the program is receiving a mixed reception -- it's not for everyone. Personally, I would prefer it.

 

[Bulldog 1]

Hey, let's drag this thread out of the dirt one more time...
Recently dug up my original 2008 Lexus ad that got me started down the path of 8 Lexus vehicles purchased within a 9 year span.
Thinking it was time to have a special "Throwback Sale" so I could pick up another pair of new Lexus cars with that amazing $0 due at deposit, 24 month lease, $399 per month, 40 to choose at this price 10 years later (at least for me, if no one else!) I decided to hit up my VIP Sales Manager at J.M. Lexus in Margate, FL, where I have purchased six of those eight Lexus cars, and the message bounced back.
Checked the website, his profile was gone. Every single sales person is now listed as a "Sales Manager" : unamused: just like every single Service Advisor is listed as a "Service Manager".
Finally reached this gentleman, whom I credit for my loyalty to shopping, buying and servicing with unwavering loyalty even though it's a 60 plus mile round trip each time. He really made the difference. Who else lets you shop via email, haggle via email and buy via email?

His response: "Part of the new Lexus Plus at JM was to cut the number of managers...".
And just like that, one of the longest tenured employees who worked their way through the system from sales rep to sales manager to VIP sales manager to BD manager is poof. Lexus Plus shed all the middle level managers - REAL managers - and replaced them with scores of new faces who had to agree to a pay plan based on set pricing, as well as taking on the added responsibility of F&I since they now boast one person from start to finish, no handoffs. And with no haggle / no negotiating pricing, well...
They claim they're doing really well, sales on pace, getting 5 star reviews from clients. Me? I don't see it. Literally. When you want to compare dealers' ads for who's running the best lease deals, they have none. You have to contact them via email or in person to find out what they're going to charge you. Absolutely no clue what they're charging simply shopping online.

With the dismissal of my guy, I'm pretty much done with the self-proclaimed "largest volume lexus dealer in the world since 1992." Buh-Bye.:waving:

 

[spwolf]

Hey, let's drag this thread out of the dirt one more time...

so you didnt actually even check the pricing with them? It would be interesting to see if there is a difference.

Obviously now it is a salaried job, not based on comission, so previous sales guys dont work but it should be way more relaxed environment and better overall service since there is no pressure like before where they wouldnt let you out of the building before you sign something.

 

[mmcartalk]

With the dismissal of my guy, I'm pretty much done with the self-proclaimed "largest volume lexus dealer in the world since 1992." Buh-Bye.:waving:

I don't think I quite followed the story. This friend of yours that you bought several cars from previously......did the dealership actually let him go completely (in other words, fire him), or just change his job-title? Titles mean little...it's what a person actually has to DO that makes a difference.

 

[IS-SV]

As a related side note; in the car business (like most business today in 2018), I have very low expectations for benefits of “loyalty”.

 

[Joaquin Ruhi]

I'm well aware of the ambivalent-to-negative feelings aroused here by JM Lexus. Nonetheless, here's another article on the dealership's Lexus Plus experience, this one from WardsAuto:

Lexus Hopes JM Participation a Boon to Plus Program
Mar 15, 2018 - Christie Schweinsberg | WardsAuto
The time may be optimal for non-negotiable pricing to take hold, says JM Lexus’ Jim Dunn, as Internet-connected smartphones have changed the car-buying process.

Lexus’ 2-year-old negotiation-free pricing program, Lexus Plus, received a shot in the arm last year when the brand’s largest U.S. dealer by volume opted in.

The Toyota luxury brand is hoping JM Lexus’ entry into Lexus Plus will prompt more of its 237 U.S. dealers to participate. Currently there only are 12 Lexus Plus dealers in the U.S., most with much fewer new-vehicle sales than JM Lexus, located 12 miles (19 km) north of Fort Lauderdale in Margate, FL, and which sold 5,000 new Lexuses in 2017.

“If Lexus Plus flourishes in (the) Miami (area), one of the most competitive markets in the country, with the largest Lexus dealer in the world, then we’ve probably got a process that can work anywhere,” says Jeff Bracken, general manager-Lexus U.S.

After nine months of training, JM Lexus launched Lexus Plus on Dec. 1. And so far, so good, says the store’s vice president and general manager, Jim Dunn.

“Anybody that’s bought a car from us, I haven’t heard a discouraging word at this point,” he 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.”

The idea behind non-negotiable pricing, which has been tried by other brands, famously by General Motors’ defunct Saturn marque, is to remove the stress that can arise for both buyers and sellers when dickering over a vehicle’s price.

The time may be optimal for non-negotiable pricing to take hold, says Dunn, as car-buying has changed due to the proliferation of Internet-connected smartphones.

“When I first got in the car business, (customers) would shop five or six dealerships and just go from dealership to dealership to try and get the best deal,” he says. “And today they just have to sit in front of their telephone to check and see what’s out there.

“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.”

Cooper Ericksen, vice president-marketing for Lexus U.S. says the training and setting up of Lexus Plus includes mapping out processes, determining market-based prices for vehicles, creating pricing menus for service events and then establishing systems to facilitate the above.

One part of the JM training, performed by GP Sandy, was “10 Conversations,” meetings designed in part to help the dealership’s 400 employees devise new approaches to fixed and variable operations, among other things.

Both Bracken and Ericksen emphasize the manufacturer is not trying to have too heavy a hand in shaping what each store does.

“It’s not us telling them what to do,” Ericksen says. “It’s facilitating the conversations with the store, because each individual dealership will have their own nuances and processes of how to accomplish it.”

Lexus shares with its Plus dealers composite reports from financial-statement data, as well as reams of industry data, to help them set prices, Bracken says.

Because pricing vehicles correctly is key to Lexus Plus dealers’ success, JM Lexus, as well as other participating dealers, created a new position of pricing analyst. JM also has a full-time trainer to advise and guide staff on processes.

Dealers may re-price models every week, every other week or monthly depending on their local market conditions, and prices can differ from vehicles within a model line or be the same across the board.

“They might pool 10 RXs at the same price, but it’s the dealer’s decision,” Bracken says, adding conversely one RX may be more expensive than another if it is a new arrival on the lot.

Vehicle characteristics such as color and installed equipment also factor into pricing decisions, says Ericksen.

Single Point of Contact

Another, perhaps more important aspect of Lexus Plus is the single point of contact during a sale, with surveys showing car-buyers have never liked the “old hand-off,” as Dunn calls it.

“(Traditionally in the vehicle-buying process) you had a salesman, then you had the T.O. (turnover) man come in, and then you may have had an accessory person…and then you get taken to the finance office,” he says. “After that you had maybe somebody different that’s going to deliver the car. So we just want to make it fun for the customer and have them count on one person to take them through that journey.”

Being a jack-of-all-trades has turned salespeople into quasi-sales managers, says Dunn. “They handle everything from tip to tail.”

Contrary to what some may expect as an outcome, he has found streamlining the buying process doesn’t necessarily cut down on the time spent by a customer in his store.

Results of a survey he commissioned a few years ago revealed a common thread: Customers were frustrated by the hours they had to spend in a dealership buying a car, because they were forced to see several people.

But at JM Lexus, time no longer spent negotiating and dealing with multiple staffers now typically is taken up with learning about the scads of features on today’s new cars and trucks.

“At delivery we do a better job of sharing time with the customer, because with technology you really have to spend the time with (customers) to have them understand exactly what their car has.”

A common drawback to haggle-free pricing is the opportunity for competing dealers to undercut dealers not flexible on price. Perhaps reflecting that concern, about half of the Lexus Plus dealers are in smaller markets, such as Appleton, WI, and Omaha, NE, where the nearest competing Lexus store is an hour or more away. The other Lexus Plus dealers are in Greenwood Village, CO; Indianapolis, IN; Wichita, KS; Portland, ME; Lincoln, NE; Bellevue, WA; and in three Pennsylvania cities: Pittsburgh, Allentown and Wexford.

Says Ericksen: “(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.

Slow to Take Hold

With only a sliver of Lexus’ 237 U.S. dealers participating in Lexus Plus nearly 24 months after its launch, it is a program that hasn’t been a screaming success thus far.

Mark Rikess, a dealer consultant and an advocate of no-haggle pricing, has a few ideas why.

It’s tough to make changes when times are good, he theorizes. And business has been good in the U.S., with new light-vehicle sales surpassing 17 million units in 2015, 2016 and 2017, Wards Intelligence data shows.

“The best time to change is when you’re at the top, but it’s also the most emotionally difficult time to change because you’re changing what appears to be a successful formula,” Rikess tells WardsAuto.

Going to a single point of contact in the sales process also is a major hurdle for some dealers to overcome, he says, as some senior salespeople may not want to do F&I and younger salespeople have a lot thrown at them in training.

“It’s such a steep learning curve in product, sales process, delivering vehicles, Internet process, and then put F&I on top of that,” it can be overwhelming for new sales hires, Rikess says.

Ultimately, he believes having a single point of contact is the right direction, noting it is what he advocates with his own clients, but prefers baby steps to get there.

Rikess has 200 dealerships he’s worked with to implement what he calls one-price pricing. They’ve done this largely independent of their manufacturer, and he believes it is the way the industry will have to solve the issue of high employee turnover among young people.

It also will help get younger buyers in the door, because Millennials demand a friction-less sales environment, he says.

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.

Ericksen says Lexus doesn’t have fixed goals of converting a certain number of dealers to Lexus Plus.

“We feel over time, as we refine and share and get this dialed in, that more and more dealers will want to gravitate to this type of process,” he says.

Getting the word out to customers is the next challenge, Ericksen says. To that end, JM Lexus has a commercial running in South Florida announcing its participation in Lexus Plus and also is engaging in direct marketing activities.

http://wardsauto.com/dealer/lexus-hopes-jm-participation-boon-plus-program

 

[krew]

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

JM Lexus joined the Lexus Plus program last year.

View the original article post

 

[GTG]

Well it’s a plan that may work , but the dealer always wins . If its not a profit in a years time , we will know .

 

[krew]

krew

Commercial: Explaining the Lexus Plus Negotiation-Free Program

Breaking the maze.

View the original article post