Lexus to introduce haggle-free pricing

[Tragic Bronson]

http://www.detroitnews.com/story/bu...016/04/05/lexus-haggle-free-pricing/82660540/

Toyota Motor Corp.’s Lexus luxury division is about one month away from launching a no-haggle pricing experiment that it developed with 11 U.S. dealers who volunteered. A significant number of retailers are unwilling to go along.

“Many of our dealers, philosophically, are opposed,” said Jeff Bracken, group vice president and general manager for Lexus. “They’re saying, ‘You’re wholesale. We’re retail. Stay out of our business.’ ”

Lexus wants to experiment with the new system in part to woo younger buyers, some of whom regard haggling as a retail experience better suited for their grandparents’ generation. Interest in a less painful car-buying process have helped given rise to CarMax Inc., the largest retailer of used cars, and TrueCar Inc., which provides consumers information about what their peers are paying.

About 44 percent of consumers don’t want to negotiate the price of a vehicle, a survey by car-buying website Autotrader found last year. While respondents said haggling was their top frustration, most said it’s the only path to a fair price, so 56 percent were committed to duking it out.

“There’s nothing simple about this,” Bracken said.

Despite the pushback, no-haggle pricing could have a future at least in parts of Lexus’s dealer network, Bracken said. The luxury division’s dealers have unusual bargaining power in part because the company limits how many exist.

Lexus has 236 dealers in the U.S. They sold almost 1,500 on average last year, compared with just over 1,000 on average for dealers of BMW AG’s namesake brand and Daimler AG’s Mercedes-Benz, said Erin Kerrigan, founder of Kerrigan Advisers in Irvine, California.

While John Iacono, a Lexus dealer in New York, said he thinks no-haggle pricing is a good idea, he’s waiting for the pilot programs taking place in less-competitive, non-metropolitan areas, to work out the kinks before implementing it at his locations in Manhattan, Brooklyn and Queens. Dealers will need to participate all together for them to feel comfortable releasing their prices, he said. Otherwise, the transparency could give non-participating dealers an unfair advantage.

“What Lexus is trying to do is figure out a business model that keeps the dealer competitive with the brands they compete with in their marketplace, but creates less confusion in the minds of the consumer when buying a Lexus,” he said in a phone interview.

No-haggle pricing is one element of Lexus Plus, in which dealers aim to improve customer relations by providing a single point of contact for sales and service and using technology to make transactions fast and transparent.

Some dealers are aiming to reduce the time customers take to purchase a new car to less than an hour. A few years ago, Lexus dealers needed two to three hours to sell a car, Bracken said.

 

[RAL]

Lexus Advisory Board was surveyed extensively about this around 6 months ago ... I don't know how I feel about it.

When we got our NX a year ago, our dealer was installing high tech desks in the finance managers' offices. The tops of the desks are like giant i-Pads. It makes for a basically paperless transaction and greatly speeds up the process. Quite a significant investment for dealers though. Still, hard to believe one could select and purchase a vehicle in an hour without the buyer having done a great deal of homework ahead of time. Doubt our dealer would participate in the pilot program. I'll be interested to find out.

 

[Bulldog 1]

Welcome to CarMax : unamused:
I would never purchase from a dealership who refused to negotiate.
You have created a "Take It Or Leave It" experience from which I doubt many shoppers would accept unless they were so hell bent on a certain model or color they're fine just handing over their money.
As a devout auto enthusiast, and having been employed in the industry at two different stores, my dealers with whom I do business get to know my knowledge base which is extensive due to exhaustive research, and negotiate with me accordingly.
I had a Buick sales manager seat me at his desk and walk out while I worked a deal for my father and uncle. I was merely creating different scenarios for money down vs. payments on the dealers sales application.
I've negotiated my last three Lexus leases over email and telephone.
When I got what I wanted, I only then drove the 30 miles one way and the car was waiting on me.
The process is becoming increasingly electronic and their is little paperwork exchanging hands.
Fat deal jackets full of forms is quickly becoming a thing of the past as it was back in my day.

 

[Bulldog 1]

They sold almost 1,500 on average last year

1500 what, per month? Per year?
My dealer exceeded 10,000 Lexus sales last year. That's probably why they wear the number one volume Lexus dealer in the world crown.
How could you keep your doors open if you're only selling a 1,000 cars a year?!?