SW17LS

It is, for now



Because I've been around the block a few times and I know this industry very well. In addition to the many cars I have bought or negotiated for on behalf of other people, I also did business with car dealerships for a number of years before I got into the business I'm in now. I know how car dealerships work.

All they care about is money. They may pretend that they care about service, and ratings, but all of that is a means to an end...and that end is money. Right now, he pricing is designed to get good press for this Lexus Plus thing, and its designed to get customers to want to buy a car using LexusPlus over a traditional dealership and the price incentives they are throwing out. Remember too...Lexus is trying to sell dealerships on LexusPlus too, so they're pulling out all the stops to show them how much better this will be.

If and when we get to a point where all Lexus dealerships are LexusPlus dealerships and they no longer have to attract press and people to LexusPlus, and Lexus as a company no longer incentivizing dealers to use LexusPlus, Lexus will start pulling back incentives to dealers...because in the end all they care about is money too...which will reduce the dealers profits. You'll see that gap between MSRP and the LexusPlus price shrink...mark my words.

Dealerships are VERY powerful in this country. They have a strong association and lobby, and when it comes to a manufacturer's ability to coerce a franchise dealership into doing something a certain way, US laws make that very difficult. They will have to relent and take feedback from dealers about the "LexusPlus" pricing, and you'll see that gap shrink to the point where dealers can make as much money as they can...which as we established before is all they care about.

Mark my words.

chikoo

^ that is common knowledge and applies to any business. Ever been in the hotel franchise business? It is even worse.

SW17LS

Correct...so why are some of us assuming here that they will not try and squeeze every dollar out of us as consumers that they can once they remove our ability to negotiate as good a deal for ourselves as we can? I feel like some of us are giving dealerships and carmakers a little bit too much credit here.

chikoo

2GSKaizen, don't forget the most obvious- no more salesmen

yakim

....And I still don't understand this "us" against "them", "car dealer is the enemy", and "profit is a dirty word" attitudes permeating throughout this thread. Lexus is not the enemy, car dealerships, just as any other business on the face of the earth are to make profit. Playing the haggling game does not befit the Lexus Brand and is definitely out of sync with what Lexus aspires to be.

Seems like none of it rocket science.

I also resent some participants here overreaching and overstating their position by referring to "us" , meaning that all consumers somehow are fixated on the lowest price+no profit to the dealer. I am not interested in setting the lowest price Guinness book record and earning the title of the master of "beating the dealer in their own game". I want the entire package, called "the value". Lexus wants to be the "value building" luxury brand, with the selling price only one part of the entire package. I applaud their aspirations. Will they be able to properly execute it? The future will tell.

mmarshall

Well, dealerships and salespeople also want repeat customers. Get a reputation for driving too hard a bargain on people, and you will lose business. Look at Rosenthal, for example, In our part of the country (D.C. suburbs)....they are one of the prime examples. They got a reputation for being jerks in both the sales and service departments...and recently have lost several dealerships that either went out of business or got bought out by other families.

yakim

Nonsense.

A car still needs to be sold by a human...advisors, guides, facilitators....whatever the moniker

chikoo

Frankly speaking either you are one of the owners of the dealership in Omaha pushing the idea so as to maximize the profit to the family or clueless salesman.

How many salesmen do you see at Macy's or any other store with prices on a tag with discounts that they decide to give when they want to give?

gengar

... and Lexus dealerships even now have these types of positions in addition to salespeople.

It is absolute nonsense to believe that Lexus will not cut costs by eliminating unnecessary positions and middle men with a no haggle policy.

SW17LS

Thats not really the case. There will always be somebody there to facilitate the process, show the vehicle, etc. Whether that person will be a commissioned salesperson, or a salaried facilitator is a question. If you look at other no-haggle dealers, there are still salespeople. Carmax is a good example, Saturn when they were around. Fitzgerald is a chain of dealers here that is no haggle...still salespeople as there always have been.

Why do they want repeat customers? Money.

And anymore in the car business, they're not really worried about repeat customers, and good career salespeople who are good at building relationships have moved on to industries where they can make a much better living. People will always walk in the door because of a dealership's geography, and very few people return to the same dealership or salesman who sold them the car. Thats a dying thing in every industry.

Thats just the nature of any negotiation. You are adversaries whether you want to be or not. He wants to sell you the car for the most money he can, and you want to pay as little as you can. Thats the nature of a sales negotiation.

If you don't want it to be that way, thats fine, but ultimately thats going to cost you more as a consumer, and its going to reduce the potential compensation for the salesperson you're involved with. Ask car salespeople whether they want a no haggle dealer. Sure they may only make a few hundred bucks off me, but people come in and way overpay, and they make it up on them.

Quite frankly, I don't care about what "befits the Lexus brand" or "what Lexus aspires to be". I'm a consumer, I don't work for Lexus, I don't own a dealership, I buy their products and sorry...I want to pay as little for them as I can...as I do everything else I buy. If you want to pay more, nobody is stopping you...march in and pay MSRP...they'll love you and give you great service.

When I say "us" I mean consumers. Like I said, if you want to give more profit to the dealership by all means, pay MSRP. Nobody is saying you need a discount at all, they will be happy to sell you a car for MSRP. I bet you'll get great service.

For me? Theres no value they can offer me but the best price. If another dealer has it for less, I'll buy it there. Thats just the bottom line. I'm not out here trying to just give charity money to car dealerships. I work hard for my money and I want to keep as much of it as I can for me and my family to enjoy. $3,000 saved on a car is a condo at the beach for a week.

yakim

I am just a sensible person, Mr. Chikoo, someone who is not interested in an adversarial relationship and the tug-of-war while purchasing a car but rather, looking for a "win/win", not the "winner takes all" solution.

Perhaps, you will get it one day

yakim

I am very, very sorry to hear that, Mr SWXYZ

Please accept my deepest sympathies and heartfelt condolences.

coolsaber

So whats the problem in the way you see dealership work now?

I get it, you want a less adversarial way of doing business vs others who want the best deal possible and want to negotiate endlessly.

The way it is now, everyone's happy. If you`d like you can basically let a broker, Truecar, or even the dealership CA to dictate you the price, you go in, sign paperwork, grab the keys and your golden. Your time and money are both put to good use.

If someone wants to negotiate tooth and nail for 24 hours straight, then they can also do that.

Plus, with say 100 cars a month, the variation exists to make mini on one, and then get the lions share profit on the next. Dealership makes money Customers are happy.

imo the only reason I see one can be disappointed in the current system is as follows:

1) Negotiations are scary and you felt like you have left money on the table=aka feelings of sadness. Lexus Plus setting the bottom price makes everyone feel happy on the price they pay. You dont have to be the best negotiator ever to get the best price

2) Dealers have issues with the backend incentives and profit margins. Big dealerships can absorb more then a smaller dealer. Smaller dealers feel left out and want an equal playing field

3) Dealers again. Right now lead generation aka potential customers is formulated in various ways:
a) Word of mouth
b) Physical Ads
c) Mailing Lists
d) Car buying Websites

The most effective right now is car buying websites. If they can make those website unnecessary by setting the current pricing set, then dealership save that money. TADA less ad $$$ and more for you.

SW17LS

Or just pay full price. No adversarial relationship then. Just pay whatever they want you to pay, they'll love you.

mmarshall

Well, that's my point. The best way to get repeat customers is not to treat them like cattle. This is not the 1980s any longer, when dealerships selling hard-to-get, high-demand/low-supply, import-restricted Japanese vehicles could treat customers any way they wanted (just try and buy a Honda Accord back then), and still have a line waiting at their front doors. Gone, also, are the days (thanks primarily to competition from Lexus, but also to a couple of other luxury-automakers) when Mercedes and BMW shops could be snobbish and arrogant. These days, do that, and you lose customers....they go right down the street.

That may (?) work in places like this area (and SoCal) that have a huge mobile-population and a continuous demand for new vehicles (and, even then, not always). But, in most places of the country, the public judges a dealership by how they are treated. Not only that, but dealerships strive for high customer-satifaction ratings with organizations like CR and J.D. Power put a lot of pressure on dealerships.

For instance, I got a simple front-tire plug lately, from a screw-head puncture, when I noticed its PSI lagging a little behind the other three (Buick used individual tire-PSIi sensors on each wheel instead of the simpler wheel-rotation comparison sensors). I got surveys, phone calls, E-Mails......(you name it).......for a solid week afterwards, asking my satisfaction and rating the shop. And that's just for a simple tire-plug....much less a whole new vehicle.

If you're wondering why I got the plug done at my own GM shop instead of a regular independent shop, four reasons.....a plug is a simple inexpensive repair to start with, my car was close to the dealership when I noticed the PSI drop, they took me immediately without waiting or an appointment, they know me there, and almost always give me a discount off the regular parts/labor rates.