Lithia Opens First No-Haggle Stores

Lithia Motors — anxious to keep a step ahead of megadealer competitors, including used-car chain CarMax — has opened its first used-car superstore in the northeastern Colorado city of Loveland and launched a no-haggle new-vehicle pricing strategy at 20 of its 105 U.S. dealerships.

The Colorado store is the first of Lithia's proposed national chain of no-dicker used-car outlets aimed at markets not served by CarMax. The second and third sites in the chain will be operational in the 2008-model year at the Texas cities of Amarillo and Lubbock.

Not to be outdone, CarMax CEO Tom Folliard says growth is continuing at its nationwide network, with a new location set for the Philadelphia market.

Lithia Chairman and CEO Sid DeBoer has set a 3-year time frame for turning its entire network into a no-haggle enterprise.

DeBoer says sales people at the first 20 new-vehicle stores deploying the no-haggle strategy still can throw in an aftermarket item priced at $100 or less to close a deal.

“But, so far, up to 80% of buyers at our 20 no-haggle stores pay the set price without throw-ins,” he says.

Vehicles are re-priced at the “Lithia 20” every week, depending on factory incentives, and finance and insurance products are included on the fixed price list. “Customers find the idea user-friendly and drive away highly satisfied with the no-dicker-sticker approach,” says DeBoer.

The 20 Lithia dealers offering set prices are in Alaska, California, Nevada, Texas and Washington. More dealerships will be added early next year.

Based in Medford, OR, Lithia has built its network primarily in medium-size markets where its franchises do not have same-brand competitors. About two-thirds of Lithia's 192 franchises are Detroit 3 domestic brands, with Chrysler LLC dominant as the provider of about 40% of Lithia's gross revenues.

Nine of Lithia's franchises were no-haggle already; three Saturn and six Scion. DeBoer says salespersons must be “tuned in” to not negotiating.