Lexus tries no haggle pricing at dealerships
Online new-car buying will also expand as Lexus tries to gain market share
The novel idea of no-haggle pricing is finally coming to Lexus dealerships in the U.S. Not all of them — just some: Lexus is going to give preset pricing the old college try, in an effort to make the dealership experience a little less stressful.
“While negotiation-free pricing is not revolutionary, we strongly believe the concept will further elevate transaction transparency and customer care,” Jeff Bracken, Lexus general manager, told an audience at the Center for Automotive Research’s Management Briefing Seminars attended by Automotive News.
“The dealers set the price, and that’s the price,” Bracken said. “There’s no wiggle room — that’s the price.”
The no-haggle pricing approach was tried 25 years ago with Saturn, with a very limited amount of success. So why is Lexus eager to try this again?
The aim of trying the no-haggle approach is improving conquest rates, customer retention, employee turnover, individual dealer profitability and market share, according to Automotive News. And, we suspect, the ability to instantly compare options and prices on a smartphone — something that was not easily available just a few years ago — is also changing the way people shop for cars.
Beyond that, Automotive News notes that Lexus’ loss of the top sales position among luxury brands to BMW in 2011 and the continuing pitched battle in the luxury car market is motivating the company to explore new approaches to the customer experience.
Perhaps of equal significance to no-haggle pricing is the expansion of online car ordering, an approach viewed with great skepticism just six months ago when Volvo announced that it would make all of its cars available for order online, retaining dealerships for vehicle prep and delivery. Lexus says it will be possible for shoppers to actually buy a vehicle online, though delivery will also take place through a dealership as in Volvo’s model.
The automaker is optimistic about the pilot program among the handful of dealerships, which will be spread out geographically to maximize feedback for the dealers and company from this experiment.
“Once we move through this pilot, our plan is that other dealers will see how this will flourish and they’ll pick up on it as well,” Bracken indicated.