Lexus aims to go haggle-free, dealers grumble

April 13, 2016

For many car shoppers, haggling is a relic of days gone by. To them, haggling feels like mimeographs or three-martini lunches: once part of a business person's daily routine, but woefully out of date.

Lexus feels the same, and it's rolling out a pilot program that could rid Lexus dealerships of haggling forever. 

Lexus dealers aren't happy about that.

Trial run

Lexus' program involves 11 of its 236 U.S. dealerships. It's part of a larger initiative entitled Lexus Plus, which aims to improve the sales and service experience. Doing so involves streamlining the sales process so that purchases can be carried out more quickly. Lexus Plus also intends to give consumers a single point of contact--kind of like a concierge--who can facilitate both sales and service.

The no-haggle portion of Lexus Plus comes in response to numerous surveys showing that car shoppers hate haggling more than any other part of the buying process. In fact, a recent study from Autotrader found a whopping 44 percent of consumers didn't want to negotiate the price of a vehicle. (The primary reason that the remaining 56 percent agreed to do so was because they didn't see a way around the process.) 

In any other industry, those kind of numbers would demand swift action. If, for example, 44 percent of Starbucks consumers said they hated the color green, you can be pretty sure the company would unveil a new logo before the end of the month.

So, it's only natural that Lexus would take that information and try to revamp its sales strategy to make consumers more comfortable. That's doubly true since it appears that the shoppers who hate haggling most are Millennials, which every auto brand on the planet is trying to woo.

Pros and cons

Like many car salespeople, Lexus dealers are divided on doing away with haggling.

Some think it's a great idea. They may be wary of the kinks in such a plan, but they have faith that straightforward pricing is the way of the future.

Others aren't convinced at all. They feel that their "negotiation"-based sales model is working, and they don't want any interference from Lexus HQ.

We see both sides of the argument. Admittedly, few of us enjoy haggling. Like walking into a holiday dinner, haggling requires a lot of energy, a lot of posturing, a lot of time spent playing the game. We don't haggle over the price of computers or groceries, why should we do it for a car?

On the other hand, we understand that participants in Lexus' new program may end up selling at a disadvantage. As attractive as "no-haggle" pricing might look on commercials, it gives less-transparent "negotiators" an opportunity to undercut competitors' pricing.

If Lexus hopes to launch its set-price program nationwide, it'll need to have every shop onboard and ensure that consumers understand the value that such a program offers.

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