1. This site uses cookies. By continuing to use this site, you are agreeing to our use of cookies. Learn More.
Dismiss Notice
Share it!! Hit that Like Button! Tweet It!!

Lexus Presses on With Haggle-Free Pricing as Dealers Push Back

Discussion in 'Lexus Passenger and Sports Car' started by MG, Apr 4, 2016.

  1. MG

    MG Moderator Staff Member


    Toyota Motor Corp.’s Lexus luxury division is about one month away from launching a no-haggle pricing experiment that it developed with 11 U.S. dealers who volunteered. A significant number of retailers are unwilling to go along.

    “Many of our dealers, philosophically, are opposed,” Jeff Bracken, group vice president and general manager for Lexus, said Thursday ahead of the National Automobile Dealers Association convention in Las Vegas. “They’re saying, ‘You’re wholesale. We’re retail. Stay out of our business.’”

    Lexus wants to experiment with the new system in part to woo younger buyers, some of whom regard haggling as a retail experience better suited for their grandparents’ generation. Interest in a less-painful car-buying process have helped given rise to CarMax Inc., the largest retailer of used cars, and TrueCar Inc., which provides consumers information about what their peers are paying.

    About 44 percent of consumers don’t want to negotiate the price of a vehicle, a surveyby car-buying website Autotrader found last year. While respondents said haggling was their top frustration, most said it’s the only way to get a fair price, so 56 percent were committed to duking it out.

    “There’s nothing simple about this,” Bracken said.

    Dealer Power

    Despite the pushback, no-haggle pricing could have a future at least in parts of Lexus’s dealer network, Bracken said. The luxury division’s dealers have unusual bargaining power in part because the company limits how many exist.

    Lexus now has 236 dealers in the U.S. They sold almost 1,500 on average last year, compared with just over 1,000 on average for dealers of BMW AG’s namesake brand and Daimler AG’s Mercedes-Benz, according to Erin Kerrigan, founder of Kerrigan Advisers in Irvine, California.

    No-haggle pricing is one element of Lexus Plus, in which dealers aim to improve customer relations by providing a single point of contact for sales and service and using technology to make transactions fast and transparent.

    Some dealers are aiming to reduce the time customers take to purchase a new car to less than an hour. A few years ago, Lexus dealers needed 2 to 3 hours to sell a car, Bracken said.

    Lexus sold the most luxury autos in the U.S. for a second straight month in March, closing in on Mercedes-Benz’s first-quarter lead, even as sales slipped 2.8 percent, weighed down by a 14 percent drop in deliveries of cars. But SUV sales rose 14 percent -- even though the company cut rebates and other incentives by 24 percent to $1,854 per vehicle, according to an analysis by Autodata Corp.

Share This Page