JDR76

In my dealings with Saturn and Scion, this is essentially correct. My only real negotiations were over the value of my trade. It made for a very nice interaction with my salesperson, as they were no longer the middle man of the deal. The salesperson was there to show me the car, answer questions, and help with the paperwork. It was a very pleasant experience.

Riles

I don't know if they're still doing it, but when I bought a Mini Cooper for a spouse in 2008 it was a no-haggle purchase and it was the easiest car transaction of my life. I think it was 45 minutes from walking in the door to walking out with the signed and paid-for order form (I special ordered from the car configurator, so it was a few weeks until it arrived).

It sounds as though I'm in the minority on this board, but I just hate haggling. Charge a price for your product, and if it's fair and I want the product, I'll pay it. It forces the manufacturer to do the hard work on pricing, instead of the consumer. Haggling is just a technique used by dealerships to ensure that customers are paying absolutely the most that they are willing to pay for a car.

wildeklave

for a majority of car buyers the haggling is a no win situation. The dealers are negotiating 50-100 vehicles a week while the consumer may only do it once every 3-10 years. As a consumer you don't know what the break even price for the dealer is. That is why many consumers are using the TrueCar and Edmunds pricing now. While it may not be the lowest price possible it is generally a fair price where the consumer is not getting ripped off and the dealer makes a little.

What will be interesting is if service changes in this model. Will it become a thing where if you service your vehicle at a dealer where you didn't buy the vehicle you won't get a loaner. Will there be other items the dealers play up in this model?

Recently my wife was buying a Mazda 3. She did her research and had her Edmunds / True Car price. She knew a lot about the vehicle she wanted and had a vin for a specific vehicle she wanted with the engine configuration and packages she desired. The dealer didn't wiggle on that price at all but negotiated the trade in, extended warranty, etc.... We saw another customer come in that appeared to know nothing about cars. This middle aged woman said to the salesman that she wanted an all wheel drive SUV. Mazda has the smaller CX5 and the larger CX9 but this woman didn't know the differences between them in regards to size, engine, or anything else. I am guessing the salesman was salivating inside.

gzorn

So Lexus is going to try the Saturn sales model of no negotiation.

http://www.usatoday.com/story/money/...hips/31219743/

TRAVERSE CITY, Mich.---Lexus is introducing negotiation-free dealerships as a way to differentiate its dealer experience in a field where the competition has closed the gap in offering a premium experience, said Jeff Bracken, general manager of Toyota's Lexus luxury division.

Bracken announced Wednesday at the Center for Automotive Research Management Briefing Seminars that a dozen handpicked Lexus dealers will start a pilot project where prices for new and used cars as well as parts and service have set prices that are not subject to negotiation

Dealers must be willing to let customers walk away if they don't like the set price. Bracken said he expects a dip in sales and share in the short term but that should only last a couple months until customers get used to the new pricing strategy.

The idea goes back to a two-day meeting in the winter of 2013 where the company and a small group of dealers acknowledged there are customers who don't like the dealership experience, largely because of the haggling.

The concept of negotiation-free pricing is not revolutionary, and Bracken said there is a Toyota dealer in Phoenix who has successfully used it for 12 years with success. "So we know it can be done, even in a highly competitive market."

Since General Motors got rid of Saturn, no automotive brand currently adopts the strategy, Bracken said.

The dealers involved in the pilot program will meet in October and their employees will receive training from an outside firm. The program will start in the first quarter of 2016 and run all year. It will be evaluated almost weekly.

Bracken fully expects it to be successful and roll out to more dealers in 2017. He doubts all 236 dealers will embrace it, but would be happy to see the majority switch to set pricing.

Dealers set the price and once it is set, they are not to change it over the course of a sale. Prices can be adjusted periodically but the expectation is they remain unchanged for months at a time. Incentives are applied to the price normally.

"The dealer has to be willing to let the customer walk away or word gets out and the model falls apart," Bracken said in an interview.

Lexus entered the automotive industry more than 25 years ago with 81 hand selected dealers. Dealers have spent $400 million over the last four years and plan to spend another $800 million over the next three years.

The luxury segment is expected to end the year at 2 million, up 8% from 2013, and represent 12% of the U.S. industry. Generation X and Y account for a third of luxury sales now and will become the largest group of luxury buyers by the end of the decade.

Lexus has a sales goal of 340,000 vehicles this year and is pacing ahead of that target, Bracken said. But it is in a horse race for the luxury title with BMW and Mercedes-Benz currently ahead of Lexus in year-to-date sales.

In 1998, Lexus launched the first luxury crossover SUV, the RX, which has become the bread and butter of the brand.

The fourth generation RX was introduced earlier this year at the New York auto show with an aggressive new look and an imposing grille.

Bracken said he knows the spindle grille design has been polarizing to some. "But, at the end of the day, the risk is essential for our brand to flourish moving forward."

To be more competitive, Lexus decided a few years ago it needed to add performance to its lineup of sedans and SUV's. "And I'm not talking about performance like a Sunday at the ballet. I'm talking about a surge of adrenaline like you'd get trying to out run a grizzly bear on the Alaskan frontier with a salmon in your back pocket... something Lexus really wasn't known for."

The brand has added performance or "F Sport" versions of many of its vehicles as well as a a limited run of 2,500 "Crafted Line" special editions of the IS, GS, ES, LS and RX.

The new 2015 Lexus NX compact crossover that launched at the end of 2014, adding a performance nameplate. It has a starting price of $35,400 and offers the brand's first turbocharged engine.

Bracken said the Lexus IS will add a turbo engine when it launches this month and two more vehicles will be turbocharged by year end as the brand plays catch up to an industry trend of smaller but more powerful engines to improve fuel economy.

bc6152

I just read an article in USA Today regarding Lexus going to a no haggle pricing policy.
Apparently Lexus believes that it can succeed in selling their cars without any negotiation with the customers, They are rolling this policy out nationwide with 12 dealers at first, then all if it become successful. They plan to let the customer walk away if they refuse to pay the fixed price. The article didn't say if the price would be MSRP or something else. They also stated that a new car that would be equal to the LS line will be forthcoming. Here's a link:

http://www.usatoday.com/story/money/...hips/31219743/

12jimmyjam

Eh, I absolutely despise when dealers do this. I refuse to purchase from dealers who give me that don't haggle stuff.

I wonder if this includes used cars?

JDR76

Being discussed here:

https://www.clublexus.com/forums/car...-s-stores.html

lesz

Interesting article and information.

I've always been curious about auto dealers who advertise "no haggle" pricing, and I've wondered whether they really meant it.

It seems to me that, if a dealer really wants to make a sale with a customer who will not accept the no haggle price, there are ways that the dealer could fudge on the no haggle price. Certainly, they could improve the deal by over-valuing trade ins. Or they could do things like throwing in dealer-installed options at little or no cost, giving extended warranties, including, say, 5 years of service in the deal, etc.

I am skeptical about whether a no haggle pricing policy would truly mean that there would be no need for negotiations, and I suspect that those who would walk into the dealer thinking that there was no need for them to have done their homework or to negotiate will still end up having paid more or gotten less than those customers who have done their homework and who do still engage in some level of negotiations on items other than the advertised price for the vehicle.

LexBob2

Yes, it does seem that it would be difficult for dealerships to strictly adhere to a no-haggle policy. It's a competitive market out there with the various competing brands that might be offering this type of pricing. It makes me wonder if this isn't more of a test vs. the first step in a national roll out.

T4Fun

well i think toyota got this wrong. Only tsla offers that model of no haggle pricing. Toyota will lose a lot of customers imho.

lesz

From my reading of the article, it doesn't seem that Lexus is going to set the selling prices or that all dealers will necessarily use the same selling prices. Instead, it sounds like each dealer will set its own selling prices, and, once those prices are set, negotiations on those prices will not be allowed. Further, once a dealer sets prices, those prices will remain in effect for, at least, a couple/few months.

bc6152

It will be interesting to see where the dealers "fix" the price. MSRP? a certain percentage reduction?

I agree with you Les, there are numerous ways to sweeten the pot in a sale. Accessories, extended warranties, etc.

tex2670

The sad thing is that I think most people who post on owner's forums like this one lose sight of the fact that this woman you mention is closer to the norm than you might think. That is why the "no haggle" policies utilized by individual dealers actually can work. Because for every person who has done the research and knows they can easily get a better deal, there is a line of customers who hear no-haggle, and think "thank heavens", are shown how much they are saving from MSRP, and sign on the dotted line.

I've said it before--I have a neighbor that researches every purchase he makes, will buy a Groupon from any restaurant to save a few bucks, tallies his investment portfolio on a weekly basis, makes spread sheets to account for every dollar of his daughter's bat mitzvah costs, etc. He agonized for 9 months over a washer / dryer purchase. But buying a car turns his stomach--he gets the Edmonds True Market Price, goes to the closest dealer, and if they give him that price, he's done.

lesz

If each dealer can individually set its own prices, which is what I think the article is indicating, I suspect that there will still be variations in pricing from one dealer to the next and, especially, from one region to the next. I would expect that, just like it is the case now, prices will be substantially lower in regions like Southern California, Texas, etc. than they are, for example, in the Midwest. I would also guess that, within a region, there will be variations, but that the variations in the prices set by dealers within a region will be much smaller. So, I would expect that dealers in a region like the Southern California region will set their prices well below MSRP and that those in the Midwest will set them at levels modestly below MSRP. Further, I would expect that the amounts below MSRP will still vary, just as they do now, based whether it is the beginning or end of the model year, what the demand is for a particular model, etc.

Valley101

If the dealers take about one third off of their profit margin with no haggle I see that as a good thing. When it comes time for my next Lexus I would know what I am paying when I walk in the door. If I had a trade in that is where I would bargain hard. Those of you who think you are buying your car below invoice are badly mistaken. They may show you that invoice, but there is another invoice in the back office that shows what it really costs them, plus the incentives they get. A dealer can not really sell its car below invoice (not MSRP) and still remain in business. It worked great for the Saturn buyers. The car itself turned out to be a loser, but the pricing concept works. I think the pricing idea will work. That is why Lexus wants to do it. They want to get ahead of BMW and Mercedes in sales volume. Besides if I am looking for a new LS or GX I would not let a few hundred dollars change my mind. The cars have a better reliability rating and for the most part a higher resale value. BMW in general has one of the worst resale values.