Interesting...Toyota's Lexus Testing Haggle-Free Sales at 12 U.S. Stores
08-10-15, 06:10 AM
#91
As always, the devil is in the details. I agree with most of the posters that a dealership must make a profit, no matter how skinny to keep the lights on and the doors unlocked. Keeping that in mind, I generally think that around invoice leaves several hundred (or more) dollars on the table so that when I need service or support, I can still get it with no hard feelings or bitterness from the dealership. This no haggle pricing scheme, however, seems to forget that there is still sometimes significant negotiation when a trade in is involved. In my experience, the trade in number is sometimes more contentious than the price for the new car and can leave the customer feeling totally ripped off, regardless of the price for the new car. Of course, that's not to mention the many hundreds of dollars dealerships try to extort with mostly unnecessary but high margin adders like nitrogen in the tires, paint protection, etc. I'm not real sure how this will play out but it will entertaining to watch!
08-10-15, 06:41 AM
#92
Lexus Test Driver
As always, the devil is in the details. I agree with most of the posters that a dealership must make a profit, no matter how skinny to keep the lights on and the doors unlocked. Keeping that in mind, I generally think that around invoice leaves several hundred (or more) dollars on the table so that when I need service or support, I can still get it with no hard feelings or bitterness from the dealership. This no haggle pricing scheme, however, seems to forget that there is still sometimes significant negotiation when a trade in is involved. In my experience, the trade in number is sometimes more contentious than the price for the new car and can leave the customer feeling totally ripped off, regardless of the price for the new car. Of course, that's not to mention the many hundreds of dollars dealerships try to extort with mostly unnecessary but high margin adders like nitrogen in the tires, paint protection, etc. I'm not real sure how this will play out but it will entertaining to watch!
Have the dealers treat the customers with a professional, fair and balanced experience, disclose and provide the customer a choice on which dealer options they want and don't want and everyone will be happy. If there is a perception that dealers are adding these items to "inflate margins', or using shady tactics to rip off the customer, then that's what Lexus should address.
Further, on the trade in price, the dealer I deal with won't take any non Lexus trade in, unless it is less than 5 years old and under 100K km (60K miles) and has a clean carfax. They are clear that the trade in price is close to black book value, unless there are red flags that justify less. They will be more flexible on Lexus trade ins as loyalty incentives. All this was discussed well before we even sat down to talk pricing on a car and we decided that I was better off selling my e46 privately unless I wanted them to "wholesale" it for me.
Last edited by My0gr81; 08-10-15 at 06:48 AM.
08-10-15, 06:51 AM
#93
Driver School Candidate
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To me though it makes the decision relatively simple -- if the "no haggle" price isn't fair and the dealer cannot or will not budge, I would simply buy a used car or, if that's also undesirable, just find another vehicle from another luxury maker that meets my needs.
08-10-15, 07:08 AM
#94
Lexus Fanatic
Bingo! Lexus wants to improve dealer experience? Crack down on dealer installed accessories that are pre-installed before the sale, all the additional costs added to the invoice (document fees, etc) and shady tactics related to inflating the "Freight & PDI" line item with those so called "regional dealer association fees".
Have the dealers treat the customers with a professional, fair and balanced experience, disclose and provide the customer a choice on which dealer options they want and don't want and everyone will be happy. If there is a perception that dealers are adding these items to "inflate margins', or using shady tactics to rip off the customer, then that's what Lexus should address.
Further, on the trade in price, the dealer I deal with won't take any non Lexus trade in, unless it is less than 5 years old and under 100K km (60K miles) and has a clean carfax. They are clear that the trade in price is close to black book value, unless there are red flags that justify less. They will be more flexible on Lexus trade ins as loyalty incentives. All this was discussed well before we even sat down to talk pricing on a car and we decided that I was better off selling my e46 privately unless I wanted them to "wholesale" it for me.
Have the dealers treat the customers with a professional, fair and balanced experience, disclose and provide the customer a choice on which dealer options they want and don't want and everyone will be happy. If there is a perception that dealers are adding these items to "inflate margins', or using shady tactics to rip off the customer, then that's what Lexus should address.
Further, on the trade in price, the dealer I deal with won't take any non Lexus trade in, unless it is less than 5 years old and under 100K km (60K miles) and has a clean carfax. They are clear that the trade in price is close to black book value, unless there are red flags that justify less. They will be more flexible on Lexus trade ins as loyalty incentives. All this was discussed well before we even sat down to talk pricing on a car and we decided that I was better off selling my e46 privately unless I wanted them to "wholesale" it for me.
1. The vast majority of Lexus dealers are independent franchisees. There are laws and regulations as to what restrictions Lexus or any other manufacturer can put on their franchisees. Auto dealers have a VERY strong lobby...so a lot of this needs to be "sold" to dealers as a way to make more money while improving the customer experience. Dealers don't just have to do what Lexus says.
2. The reason dealers fight so hard to sell high profit paint sealant, dealer fees, is because they loose so much profit in the sale of the car through transparent pricing available online, etc. The idea would be this no haggle approach would help dealers be better able to predict their profit per unit and they wouldn't have to do that. In any event, I've bought a lot of Lexus vehicles from several different dealers and I never have been given the hard sell on these items.
3. Again, dealers are independent businesses. Lexus can't force them to buy vehicles on trade they don't want, or to pay more for them based on some arbitrary valuation system. The consumer is always welcome to explore other options for disposition of their trade vehicle.
So, you have to understand there are limits to what Lexus can address when it comes to dealers. The dealer absorbs ALL the risk and cost of operating their dealership, if you owned a dealer franchise and that was the case and the franchisor sat there in their offices in CA and handed down "rules" and "regulations" that made it more difficult or impossible to operate your franchise for a profit or for the profit you want...what would you do? You'd change franchises wouldn't you?
I know a guy that owns a beach hotel, been staying there for years. It was a Sheraton forever. About 15 years ago Sheraton came to him and said they were going more upscale, and he needed to make a ton of improvements at his own cost to his hotel for it to remain a Sheraton. Those improvements would have made the hotel better, and would have improved guests experiences, but also increased room rates to compensate and given the relatively blue collar beach environment he was dubious. He looked at his customers, a lot of repeat customers, looked at the value the Sheraton brand brought him...and he switched the hotel to a Clarion franchise. Much less prestigious...but he didn't have to raise costs, and didn't have to spend a ton to renovate the hotel, and they are a lot less demanding. Hotel is busier than its ever been.
Same situation is true for auto manufacturers, dealers are free to make their own choices...and if the guidelines set out from the franchisor are too strict and impede too much on the dealer's ability to operate their business the way they want to then they'll switch.
Last edited by SW17LS; 08-10-15 at 07:14 AM.
08-10-15, 08:23 AM
#95
Lexus Test Driver
Further, on the trade in price, the dealer I deal with won't take any non Lexus trade in, unless it is less than 5 years old and under 100K km (60K miles) and has a clean carfax. They are clear that the trade in price is close to black book value, unless there are red flags that justify less. They will be more flexible on Lexus trade ins as loyalty incentives. All this was discussed well before we even sat down to talk pricing on a car and we decided that I was better off selling my e46 privately unless I wanted them to "wholesale" it for me.
08-10-15, 08:26 AM
#96
Lexus Test Driver
I know a guy that owns a beach hotel, been staying there for years. It was a Sheraton forever. About 15 years ago Sheraton came to him and said they were going more upscale, and he needed to make a ton of improvements at his own cost to his hotel for it to remain a Sheraton. Those improvements would have made the hotel better, and would have improved guests experiences, but also increased room rates to compensate and given the relatively blue collar beach environment he was dubious. He looked at his customers, a lot of repeat customers, looked at the value the Sheraton brand brought him...and he switched the hotel to a Clarion franchise. Much less prestigious...but he didn't have to raise costs, and didn't have to spend a ton to renovate the hotel, and they are a lot less demanding. Hotel is busier than its ever been.
Same situation is true for auto manufacturers, dealers are free to make their own choices...and if the guidelines set out from the franchisor are too strict and impede too much on the dealer's ability to operate their business the way they want to then they'll switch.
Same situation is true for auto manufacturers, dealers are free to make their own choices...and if the guidelines set out from the franchisor are too strict and impede too much on the dealer's ability to operate their business the way they want to then they'll switch.
08-10-15, 08:36 AM
#97
Lead Lap
So Lexus is finally doing well again and now want to break that model. Jesus Tapdancing Christ. "If it isn't broke, don't fix......."
Morons.
Morons.
08-10-15, 08:39 AM
#98
Lexus Test Driver
Here's the issue with what you're saying (bear in mind I'm speaking from a US perspective):
1. The vast majority of Lexus dealers are independent franchisees. There are laws and regulations as to what restrictions Lexus or any other manufacturer can put on their franchisees. Auto dealers have a VERY strong lobby...so a lot of this needs to be "sold" to dealers as a way to make more money while improving the customer experience. Dealers don't just have to do what Lexus says.
2. The reason dealers fight so hard to sell high profit paint sealant, dealer fees, is because they loose so much profit in the sale of the car through transparent pricing available online, etc. The idea would be this no haggle approach would help dealers be better able to predict their profit per unit and they wouldn't have to do that. In any event, I've bought a lot of Lexus vehicles from several different dealers and I never have been given the hard sell on these items.
3. Again, dealers are independent businesses. Lexus can't force them to buy vehicles on trade they don't want, or to pay more for them based on some arbitrary valuation system. The consumer is always welcome to explore other options for disposition of their trade vehicle.
So, you have to understand there are limits to what Lexus can address when it comes to dealers. The dealer absorbs ALL the risk and cost of operating their dealership, if you owned a dealer franchise and that was the case and the franchisor sat there in their offices in CA and handed down "rules" and "regulations" that made it more difficult or impossible to operate your franchise for a profit or for the profit you want...what would you do? You'd change franchises wouldn't you?
I know a guy that owns a beach hotel, been staying there for years. It was a Sheraton forever. About 15 years ago Sheraton came to him and said they were going more upscale, and he needed to make a ton of improvements at his own cost to his hotel for it to remain a Sheraton. Those improvements would have made the hotel better, and would have improved guests experiences, but also increased room rates to compensate and given the relatively blue collar beach environment he was dubious. He looked at his customers, a lot of repeat customers, looked at the value the Sheraton brand brought him...and he switched the hotel to a Clarion franchise. Much less prestigious...but he didn't have to raise costs, and didn't have to spend a ton to renovate the hotel, and they are a lot less demanding. Hotel is busier than its ever been.
Same situation is true for auto manufacturers, dealers are free to make their own choices...and if the guidelines set out from the franchisor are too strict and impede too much on the dealer's ability to operate their business the way they want to then they'll switch.
1. The vast majority of Lexus dealers are independent franchisees. There are laws and regulations as to what restrictions Lexus or any other manufacturer can put on their franchisees. Auto dealers have a VERY strong lobby...so a lot of this needs to be "sold" to dealers as a way to make more money while improving the customer experience. Dealers don't just have to do what Lexus says.
2. The reason dealers fight so hard to sell high profit paint sealant, dealer fees, is because they loose so much profit in the sale of the car through transparent pricing available online, etc. The idea would be this no haggle approach would help dealers be better able to predict their profit per unit and they wouldn't have to do that. In any event, I've bought a lot of Lexus vehicles from several different dealers and I never have been given the hard sell on these items.
3. Again, dealers are independent businesses. Lexus can't force them to buy vehicles on trade they don't want, or to pay more for them based on some arbitrary valuation system. The consumer is always welcome to explore other options for disposition of their trade vehicle.
So, you have to understand there are limits to what Lexus can address when it comes to dealers. The dealer absorbs ALL the risk and cost of operating their dealership, if you owned a dealer franchise and that was the case and the franchisor sat there in their offices in CA and handed down "rules" and "regulations" that made it more difficult or impossible to operate your franchise for a profit or for the profit you want...what would you do? You'd change franchises wouldn't you?
I know a guy that owns a beach hotel, been staying there for years. It was a Sheraton forever. About 15 years ago Sheraton came to him and said they were going more upscale, and he needed to make a ton of improvements at his own cost to his hotel for it to remain a Sheraton. Those improvements would have made the hotel better, and would have improved guests experiences, but also increased room rates to compensate and given the relatively blue collar beach environment he was dubious. He looked at his customers, a lot of repeat customers, looked at the value the Sheraton brand brought him...and he switched the hotel to a Clarion franchise. Much less prestigious...but he didn't have to raise costs, and didn't have to spend a ton to renovate the hotel, and they are a lot less demanding. Hotel is busier than its ever been.
Same situation is true for auto manufacturers, dealers are free to make their own choices...and if the guidelines set out from the franchisor are too strict and impede too much on the dealer's ability to operate their business the way they want to then they'll switch.
With respect to dealers choosing to forego their ability to sell a particular brand. Here, most MB dealers are corporate owned. I don't know the whole story behind this shift, but it went something similar, MB wanted to move in a certain direction, the dealers, and the regional distributors didn't see eye to eye and MB took them over. This happened at the time MB wanted to push the SMART brand here. Technically, all MB sales are "haggle free" since they focus on MSRP - promotional discounts and manufacturer's incentives. Every other fees and services are listed and since all dealers have common products and services on the invoice, there is no "feeling" that one could have gotten a better deal at another dealer.
All in all, @SW15LS, I guess we are saying the same thing. My comment about how my dealer deals with trade ins, was meant to reflect the "open and transparent" approach about what was acceptable to them as a trade, what guideline they would use to price it (black book) and what my choices were (self sell or wholesale through one of their partners).
Last edited by My0gr81; 08-10-15 at 08:50 AM.
08-10-15, 02:30 PM
#99
No haggle policy
Think about it. Can you haggle the price of clothes, food, etc. Dealers will have sales in the future on their vehicles, much like dept stores. Their sales volume will determine their prices and when they will decide to have a sale. You are not forced to buy a car on a certain day or week of the year. Wait for the deals.
08-10-15, 02:38 PM
#100
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Join Date: Dec 2003
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It will be interesting to go to a No Haggle Dealer, get their price then go to your local dealer and see it they will meet the price.
Will be interesting if they will charge the same price for Cash or Installments or Lease. And how about the extra Goodies they try to sell you at closing ??
~ Cap
Will be interesting if they will charge the same price for Cash or Installments or Lease. And how about the extra Goodies they try to sell you at closing ??
~ Cap
08-10-15, 05:37 PM
#102
Lexus Fanatic
Dealers are also "licensed franchisee" choosing to operate under the terms and conditions set in their franchise agreements with the manufacturer. As such, the franchiser can restrict the products and services the franchisee sells based on list of approved product and services. In the case of Lexus, they need to make a compelling case for the benefits from end user experience will bring additional sales and maintain healthy margins.
With respect to dealers choosing to forego their ability to sell a particular brand. Here, most MB dealers are corporate owned. I don't know the whole story behind this shift, but it went something similar, MB wanted to move in a certain direction, the dealers, and the regional distributors didn't see eye to eye and MB took them over. This happened at the time MB wanted to push the SMART brand here. Technically, all MB sales are "haggle free" since they focus on MSRP - promotional discounts and manufacturer's incentives. Every other fees and services are listed and since all dealers have common products and services on the invoice, there is no "feeling" that one could have gotten a better deal at another dealer.
All in all, @SW15LS, I guess we are saying the same thing. My comment about how my dealer deals with trade ins, was meant to reflect the "open and transparent" approach about what was acceptable to them as a trade, what guideline they would use to price it (black book) and what my choices were (self sell or wholesale through one of their partners).
08-10-15, 07:08 PM
#103
no haggle pricing
The dealer does not care if it is cash, installment or lease. Before you leave the dealer with the vehicle they will have their money. Even on a lease they get reimbursed by the manufacturer.
08-11-15, 06:17 AM
#104
Lead Lap
Fairly certain they make more money on lease/finance, than if someone walks in with stacks of cash.
08-11-15, 06:27 AM
#105
Lexus Test Driver
With respect to dealers choosing to forego their ability to sell a particular brand. Here, most MB dealers are corporate owned. I don't know the whole story behind this shift, but it went something similar, MB wanted to move in a certain direction, the dealers, and the regional distributors didn't see eye to eye and MB took them over.