Interesting...Toyota's Lexus Testing Haggle-Free Sales at 12 U.S. Stores
07-22-16, 10:14 AM
#346
Update
In the 7 weeks since his Lexus of Omaha dealership switched to no-haggle pricing, salesman Jim Endebrock has had one customer walk out.
“It was a little disappointing because I had sold him 8 cars before this,’’ Endebrock said in an interview at the dealership. “But he considers himself a shrewd negotiator, and he thought he should get something better.’’
Still, Endebrock has managed to sell 40 cars since June 1. Those customers, he says, have been delighted with the no-haggle approach, which means the dealership puts its best offer for new and used vehicles on the window sticker and then refuses to entertain counteroffers. Toyota Motor Corp.’s Lexus division is the 1st luxury brand to launch a factory-sanctioned pilot program for expanding the idea nationwide, according to Erin Kerrigan, founder of Kerrigan Advisors in Irvine, California.
1 of Endebrock’s happy customers is Pat Conroy, who returned to the dealership for a service appointment on Wednesday. Conroy, 79, is the retired purchasing director for Valmont Industries Inc., an Omaha company that makes mobile-phone towers and irrigation equipment. He says he hates haggling with car salesmen.
“I’d rather come in and be relaxed, and know what the price is, and not go away wondering if I should have offered $500 less,’’ Conroy said.
Since the earliest days of the U.S. auto industry, customers like Conroy have had no way of knowing the actual price of a car except to make a ridiculously low offer, and then wait for the dealer to respond.
All that changed about 15 years ago, when the internet began offering buyers reams of data -- not just about the dealer’s costs for delivering each car, but also the prices people were paying for similar models across town and around the country. Among other things, that newfound transparency compressed the profit margins dealers can make on new vehicles to just over 3 percent from 5 percent, said Kerrigan.
As profits in the old system evaporate, more and more individual dealers are now successfully turning to no-haggle pricing, she said, including in big cities where their competitors still use the old-fashioned model.
“They’re not by any stretch the norm, but I do think these no-haggle, one-price policies are becoming a trend,’’ Kerrigan said.
Manpower Shift
So far, 11 of the 236 U.S. Lexus dealerships have adopted the no-haggle plan, said Matt Kaleba, the brand’s national marketing manager. In the future, additional dealerships will be able to opt in and receive staff training and consulting services from Lexus.
To encourage recalcitrant dealers, the company’s Lexus Plus program comes with an additional set of incentives. As it helps dealers move toward no-haggle pricing, Lexus also helps them reorganize their operations to offer customers additional amenities, such as a salesman trained to also handle their financing paperwork, and a single point-of-contact representative for all their service requests.
In effect, Lexus Plus shifts manpower away from the finance departments that once presided over price negotiations and served as a major profit center for the dealerships, and moves it into customer service.
The Lexus of Omaha dealership is on the west side of town, a few hundred yards from the famous Boys Town home for at-risk children. Rebuilt in 2014, its main showroom features 2-story glass windows on 3 sides, and a portion of the back wall covered with various shades of climbing ivy.
The dealership is part of Baxter Auto, a family-owned conglomerate of 22 outlets in Omaha and Lincoln, Nebraska; Kansas City, Missouri; and Colorado Springs, Colorado. Those dealerships offer 19 brands, including Lexus, Toyota, Honda, Mercedes, Volkswagen, Ford and Chrysler.
Mickey Anderson, who owns Baxter with his sister Angie, said he needed four years of preparation to switch to no-haggle pricing. 1 reason: Salesmen now receive a flat fee for each car sold rather than having their compensation vary depending on the outcome of talks with each customer. Many dealerships, he said, don’t want to embark on that kind of painstaking reorganization at a time when sales and profits are booming.
Cutting Time
The deals that Lexus of Omaha offers today, he said, are basically the same as those customers could achieve after haggling their way through the old system. But he said he hopes they can complete the transaction in less than 2 hours, or half the time needed for the traditional approach.
During the 1st full sales month with the no-haggle plan, Anderson sold 1,200 vehicles at Lexus of Omaha, up 9 percent from last year’s monthly pace. He said he hopes to be selling 1,500 a month by 2018.
“I joined the company in 1990,” Anderson said, “and I knew it was wrong then that wives had to bring in their husbands because, ‘Oh, by the way, if you’re not a man you may not be able to get the best deal that could be made.’’’
Last edited by GS69; 07-22-16 at 10:19 AM.
07-22-16, 11:22 AM
#347
Lead Lap
Did Bloomberg contact our fellow poster here, since I remember the same Baxter group? Again, this article is kinda spinning things by leaving/omitting out the other 10 (or at least one from a metro) dealership experiences from the pilot program. But hey, Bloomberg news is best served spun 
07-22-16, 03:23 PM
#348
Lexus Fanatic
Those customers, he says, have been delighted with the no-haggle approach, which means the dealership puts its best offer for new and used vehicles on the window sticker and then refuses to entertain counteroffers.
07-22-16, 03:29 PM
#349
I love it no haggle. And good for the old "The customer is always right" policy, now I could go in and say here is the no haggle price, and you have to sell it to me for that. YES. And they can't say no, because its no haggle.
You do have to ask your self, how can the dealerships afford these multimillion dollar buildings, and the taxes on the land or lease on the land and all the over head? How? because the top secret mark up is crazy high, when your new car becomes about 13 years old with normal use, it is finally at the same price the dealer ship paid for it and sold it to you crazy high.
You do have to ask your self, how can the dealerships afford these multimillion dollar buildings, and the taxes on the land or lease on the land and all the over head? How? because the top secret mark up is crazy high, when your new car becomes about 13 years old with normal use, it is finally at the same price the dealer ship paid for it and sold it to you crazy high.
Last edited by dicer; 07-22-16 at 03:34 PM.
07-22-16, 03:53 PM
#350
Lexus Fanatic
An interesting question, though, is how many new high-demand, low-supply vehicles would actually be sold that way. I can clearly remember the excessive (in some cases, almost unbelievable) price-gouging on new vehicles like the Mazda Miata, Honda CRX, Chrysler PT Cruiser, Plymouth Prowler, Toyota MR2, two-seat Ford Thunderbird, Camaro SS, and others when they first debuted, and there was enormous demand and very short supply. The TRUE ethical mark of any dealership, IMO, is how they handle deals under those conditions.
07-22-16, 04:09 PM
#351
Lexus Fanatic
Originally Posted by mmarshall
I've long felt, for years, that this was one of the best ways to shop. Here in the D.C. area, the Fitzgerald chain of dealerships (in suburban MD), which deals in several different franchises, first started the one-price, no-dicker approach (known as "The Fitz Way"), and other chains have followed suit.
07-22-16, 05:04 PM
#352
Lexus Champion
I love it no haggle. And good for the old "The customer is always right" policy, now I could go in and say here is the no haggle price, and you have to sell it to me for that. YES. And they can't say no, because its no haggle.
You do have to ask your self, how can the dealerships afford these multimillion dollar buildings, and the taxes on the land or lease on the land and all the over head? How? because the top secret mark up is crazy high, when your new car becomes about 13 years old with normal use, it is finally at the same price the dealer ship paid for it and sold it to you crazy high.
You do have to ask your self, how can the dealerships afford these multimillion dollar buildings, and the taxes on the land or lease on the land and all the over head? How? because the top secret mark up is crazy high, when your new car becomes about 13 years old with normal use, it is finally at the same price the dealer ship paid for it and sold it to you crazy high.
07-22-16, 05:32 PM
#353
Not sure how the no-haggle method would work in an area like south Florida or California where there are so many dealers within a short drive of each other.
Its easy to be no-haggle if you're the only dealer in hundreds of miles....or if there are several stores but all owned by one company. But several dealers all independently owned? Thats going to be tough to change.
What really trips me out is customers say they hate to haggle but they are the ones who initiate it.
Its easy to be no-haggle if you're the only dealer in hundreds of miles....or if there are several stores but all owned by one company. But several dealers all independently owned? Thats going to be tough to change.
What really trips me out is customers say they hate to haggle but they are the ones who initiate it.
07-22-16, 05:59 PM
#354
Lexus Fanatic
A number offer it on their websites, but don't necessarily advertise it widely unless customers ask. And, of course, among used cars, Car Max has been organized around no-haggle pricing for years. I'll admit, though, that Car Max is not necessarily the cheapest way to get a used car......but that is at least partly because they don't sell junk....they have strict standards.
Last edited by mmarshall; 07-22-16 at 06:02 PM.
07-22-16, 06:25 PM
#355
Lead Lap
A number offer it on their websites, but don't necessarily advertise it widely unless customers ask. And, of course, among used cars, Car Max has been organized around no-haggle pricing for years. I'll admit, though, that Car Max is not necessarily the cheapest way to get a used car......but that is at least partly because they don't sell junk....they have strict standards.
CarMax business model is quite interesting. They offer a lot of data to both customers looking to buy and sell vehicles that normally are hard to come by. They offer the hugest inventory in the US of Used cars, seen news cars as well on there. They are the OG no haggle price dealership. In addition they have many perks that regular used car lots dont have. A return policy, a comprehensive, cheap (at least until the model is not popular at the service bays, and actually usable warranty. However the $ and perks really are dependent on what your buying. If you decide you are interested in a maintenance budget unfriendly RR, then the added premium is worth it due the warranty policy. However if your gonna want to get into a prius.....well your just paying extra for no reason at all.
Back to the point here is you cannot compare the CarMAX model to the Lexus Pilot Program, as its for a different product condition.
07-22-16, 06:28 PM
#356
Lead Lap
Not sure how the no-haggle method would work in an area like south Florida or California where there are so many dealers within a short drive of each other.
Its easy to be no-haggle if you're the only dealer in hundreds of miles....or if there are several stores but all owned by one company. But several dealers all independently owned? Thats going to be tough to change.
What really trips me out is customers say they hate to haggle but they are the ones who initiate it.
Its easy to be no-haggle if you're the only dealer in hundreds of miles....or if there are several stores but all owned by one company. But several dealers all independently owned? Thats going to be tough to change.
What really trips me out is customers say they hate to haggle but they are the ones who initiate it.
07-22-16, 10:29 PM
#357
Lexus Fanatic
Originally Posted by mmarshall
A number offer it on their websites, but don't necessarily advertise it widely unless customers ask. And, of course, among used cars, Car Max has been organized around no-haggle pricing for years. I'll admit, though, that Car Max is not necessarily the cheapest way to get a used car......but that is at least partly because they don't sell junk....they have strict standards.
The only local dealer chain I can think of that's no haggle is Fitzgerald. Carmax sure but that's used cars.
07-24-16, 07:56 PM
#358
Lexus Fanatic
considering EVERY single Lexus purchase I have made at a Lexus dealership has been a nightmare, I invite this. Sounds good to me. Other option is to just deal with internet sales. They will usually give you a lower final price . Also you can use a Costco card to get the cars at 1500 over invoice. I used my Costco card when I bought my new GS350
07-24-16, 10:33 PM
#359
Lexus Fanatic
$1,500 over invoice is IMHO not a very good deal on one of these cars.
07-25-16, 05:28 AM
#360
Lexus Fanatic
"These cars".....meaning what? Lexus products?
It can also be quite difficult, in many cases, because of a number of factors, to determine just what the exact dealer invoice is. With Consumer Reports or typical buying services, one can come reasonably close (maybe a couple of hundred dollars), but even then, a number of different factors apply.
It can also be quite difficult, in many cases, because of a number of factors, to determine just what the exact dealer invoice is. With Consumer Reports or typical buying services, one can come reasonably close (maybe a couple of hundred dollars), but even then, a number of different factors apply.