TRAVERSE CITY, MI – Twelve Lexus dealers in the U.S. have voluntarily begun offering buyers a negotiation-free sales process as part of a pilot program.
Jeff Bracken, Lexus U.S. group vice president and general manager, makes the announcement in remarks delivered this morning on the third day of the 2015 Management Briefing Seminars here.
“We’re not going to force this down anybody’s throat, but we think the marketplace is so transparent it seems like a logical step to us,” Bracken tells WardsAuto after his speech. He says if the program goes national not every dealer will be forced to offer it.
While Lexus hopes to have most of its 236 U.S. dealers embrace negotiation-free pricing, Bracken notes some dealers may prefer to dicker as the process is “capitalism at its finest.”
No-hassle car-buying already is in place, and has been for years, at Lexus’ sister brand Scion, where it is called Pure Price.
Negotiation-free pricing at Lexus will work like this: A buyer comes into the showroom, pays a price the dealer has selected for the desired vehicle, gets a walkaround of the vehicle’s features and benefits and then works with that same dealership employee throughout the entire transaction.
“That person is the salesperson and the F&I (person)…so there’s no handoff,” Bracken says, noting research shows prospective buyers don’t like being shuttled around to different staff members.
While the negotiation-free approach will touch every department of participating Lexus dealers, Bracken notes those seeking service or pre-owned vehicles still will work with staff in those departments.
Dealer Control of Pricing
The 12 participating dealers are in markets both big and small, and will have leeway in price-setting. The prices they set will be relative to their local markets and may not have any relationship with prices listed by lead generators TrueCar or Edmunds.
“They’ll drive it based on what they think is a reasonable sale price and they really do stick to that price,” Bracken says, giving an example of a Toyota dealer he knows of who wouldn’t include free floormats with a customer’s purchase of two Land Cruiser SUVs, but did donate to that customer’s favorite charity.
Bracken says of TrueCar’s and Edmunds’s near-invoice pricing, “You could almost argue, how much lower can it go?”
He knows of two Toyota dealers who have stopped advertising because price points in their markets got too low. “So (given that), and a couple of others have done this, we know it can work.”
Bracken also discusses ways in which Lexus is making its sales process more attractive to women, millennials and minorities from his MBS podium.
Last year a pilot program dubbed “The Lexus Difference” was put in place to give buyers in these groups a more personalized experience. “We know these consumers look to build relationships organically rather than only through sales,” he says.
For female buyers, the brand has hosted “Ladies Night Out” themed events to “provide a relaxing setting to learn more about Lexus vehicle technology.”
In his speech, Bracken also reflects on his father, Hal Bracken, who was a Toyota vice president of sales and spoke about “The Vanishing Import” at MBS in 1978.
WardsAuto data shows Toyota sold 538,682 units in the U.S. that year, when foreign vs. domestic autos still was a hotly debated topic.
This year through July Toyota has delivered nearly three times that amount, 1.45 million units, up 4.9% from like-2014, while the younger Bracken’s Lexus is on its way to 300,000 sales in the U.S. this year.
Lexus’ January-through-July volume was 188,664, up 13.6% from the same period year-ago, on the strength of the year-old NX compact CUV and its older but still-popular GX SUV.
Later this year the luxury marque introduces an all-new generation of its best-selling model, the RX midsize CUV.
