To those that love to haggle, they're 'pleased' knowing they got a deal better than most other people, so they feel their haggling was 'worth it'.
with margins on cars, some end up paying too much, and others end up haggling the deal down to the minimum the dealer will accept, which of course varies by dealer, time of month, year, how things are going, inventory levels, etc. if the spread between 'paid too much' and 'bare minimum' is say 10% of the price, then if a no haggle price were 5% under msrp (assuming symmetrical distribution) the dealer might make the same revenue, assuming they gained as many sales as they lost to people who couldn't stand not haggling. However, they might do more sales because a) the transactions ought to be completed a lot more quickly, and b) i submit there's way more people who would love to not to feel they have to haggle, vs those who expect to and enjoy it even.

so i don't see an obvious answer to all this. I for one HATE the song and dance at the dealer and knowing i have to haggle, because they by default want to make more margin for a commodity than is reasonable.

 

Well, we already know from the pilot program that such is not the case for many people - and I'd think that even if distrust cannot be cured for some people, then offering a system wherein new car buyers never have to be exposed to a distrustful system is the next best solution.

And IMO, new and younger car buyers are what is fueling the shift in buyer dynamic anyway. As it has with many other systems, technology is what has influenced change here. Car forums like this provide much more insight into how car dealers operate, and car buying websites and agencies now provide up-to-date information on what prices certain models are selling for in their geographic areas. I read an article once that interviewed a dealer manager (IIRC Cadillac) complaining about how the transparency gained from car info websites was severely cutting into margins. Once again, this is how dealerships operate. They want things to be as opaque as possible so that consumers cannot understand the relationship between prices and costs so that they can fool the customers into thinking they get a "deal". Technology is what's influencing the shift because dealers can't as effectively manipulate buyer emotions like they did in the past, and I think it's going to influence dealers to be more receptive of no-haggle sales systems.


I think the biggest takeaway from the pilot program so far is that (at least at one dealership) sales increased while margins stayed the same.

 

Just to note that a) was mentioned in the article I linked to above - one of the dealership owners was attracted to the no-haggle system because it would cut transaction time in half. That's another win for both the dealer and the customer.

And yes, I think it's quite clear from Lexus exec statements and various other sources that Lexus believes they will gain far more customers with a no-haggle system than they will lose.

 

The obvious flip-side of that, though, is that, if dealers DON'T make adequate margins, they won't have the funds to provide all of the perks and programs that their customers want.....coffee/latte machines, play areas for the kiddies, Internet access, car-washes, etc.....

So, if one wants that nice new car at the absolute lowest price (yes, even by excessive haggling), then be prepared to (maybe) give something up for it. The world is not always a free lunch.

 

Those amenities are primarily for service customers and are primarily funded by the service department, which by far contributes more to revenue and operating income than sales.

 

I don't "love" to haggle, just want to know that I'm not being taken advantage of, and that I'm getting a good deal.

 

Lexus.com can point you to only 10 dealers who operate Lexus plus (https://www.lexus.com/lexusplus/), and one of those, in Bellvue WA so an affluent area with competition, has an RX with broadly the same spec as my wife's car.

They want $55,744 as their Lexus Plus upfront price on an RX which has an MSRP of $58,319.

I paid $50,400 for my wife's car, which had an MSRP of around $57,500. For now, I'm sticking with my own methods

 

I thought there were 13 dealers in the program?

What's interesting is that Lexus of Bellevue is owned by O'Brien Automotive Group, which also owns Lexus of Tacoma down the road - but is not in the Lexus Plus program. The only competing dealer in the area - Lexus of Seattle - is owned by Kuni, which also owns Lexus of Greenwood Village (Colorado) which is in the Lexus Plus program.

In any case, the question being posed in this thread is what the system will be like when Lexus switches completely to a no-haggle system. Lexus Plus is not that system, as it is intended (and even marketed) specifically to co-exist with competing Lexus dealerships that haggle.

 

Something tells me that this can't be true. The invoice for the RX is not that low off $57.5K Did you have a trade?

 

The invoice is about $5k off of $57.5K and then beyond that there are incentives, bonus cash, and holdback.

How do you think it's possible to get 20% off of an LS460 right now? Invoice isn't 20% off.

 

Seems like you have a really good understanding of this system and the car industry in general. Very interesting to read your posts.

 

Probably because of SUV sales. Dealerships are trying to get rid of sedans that just aren't selling.

 

Local dealers are not going to give away a RX SUV for $5000 less than a no haggle delaer who is giving it for $5000 more. This is just rediculous and stupid on both dealers.

I am sorry, but I simply do not believe a Lexus delaer is willing to give $7000 off the MSRP of a new Lexus RX. Prove to me otherwise and I will believe it.

 

You miss my point. The point is that deal is possible even though it's dramatically below invoice. Lexus has a lot of dealer cash on the LS because it's so late in the run. I've seen rebates as high as $8,000. I got $10k off my LS460 in 2015, there was I believe a $2,000 rebate at that time.

And yes I can buy an RX for $5k off MSRP with zero effort. Literally one phone call. $7,000 with effort I believe if there's a rebate, which is very common on these vehicles. Whether you believe that or not Jill is meaningless lol. The RX is not hot, they sell well but they are incentivized, and dealers have plenty of stock. It's not a Range Rover.

Why do we care if it's "stupid" for the dealer? The dealer is your adversary.

 

I was just at the dealer this morning and almost all of the cars I looked at had dealer add-ons including the front clear bra but I know it varies from dealer to dealer. At least none of them had pinstriping like some dealers have. All of the Toyota and Honda dealers around me have pinstriping added to the car which I hate but when shopping for a car for my father, we couldn't buy one without them.

Right, I misspoke as did one person that was quoted in one of the LexusPlus articles I read did as well.