Autos

The Lexus No Haggle Program: Will It Work?

lexus es 350 2015
Source: Lexus

People hate going to the car dealer for a multitude of reasons, and getting ripped-off has become such a prominent concern that we even did a piece on how to get your way at the dealer so that you don’t get fleeced. But as USA Today recently reports, the fear of arguing over the bottom line and getting owned at the dealer may be about to change for anyone interested in a new Lexus.

Jeff Bracken, general manager of the Lexus division, recently announced that 12 handpicked Lexus dealers will begin a pilot program next year so that prices for new and used cars, as well as parts and services, will have non-negotiable numbers in order to better instill consumer confidence. America buyers haven’t seen something like this since the day Saturn disappeared, and quite honestly it could be a huge win for the luxury automaker, as those dozen dealerships prepare to attend a vigorous round of “haggle-free” training sessions this October.

Back on the ground it is unlikely that every single one of Lexus’s 236 dealerships will jump on the bargaining-free bandwagon. It’s not designed for everyone, and the Toyota-offshoot is wisely giving dealers the chance to choose. But as the luxury segment continues to grow toward representing 12% of the industry, Lexus sagely took a step back in order to confirm its suspicion that both Generation X and Y are buying roughly one-third of those cars, and that these numbers are only going to grow.

We reached out to some of our sources at Lexus to find out what really is going on with this program — specifically, why they think it is going to be a success. There are both sizable risks and rewards revolving around programs like this, with Lexus’ reputation on the line somewhere in the middle.

Source: Micah Wright/Autos Cheat Sheet
Source: Micah Wright/Autos Cheat Sheet

From what we were able to gather (which wasn’t much, since even our sources are being kept in the dark), is that this marketing plan has been something Toyota’s Lexus branch has been kicking around for years, ever since a Phoenix, Arizona-based Toyota dealership started seeing unbridled success with a similar program a dozen years ago. Piggybacking on this idea, the guys over at Lexus are planning to approach the à la carte style of luxury auto sales with a new spin, where customers can walk any time they don’t like a set price.

This may come as a shock to some, but this kind of thinking is what many younger buyers prefer, and our sources say that research shows that instead it is baby boomers who would rather haggle than settle on a set price. Insiders at Lexus also tell us that this is meant to both instill a sense of transparency, while shortening buying time considerably, with the ultimate goal being that buying time gets whittled down to two hours or less, and eventually down to one hour.

Pre-shopping online from home surely factors into the equation as well, with convenience and comfort being a core theme, much like the cars themselves. If all goes well with the program during 2016, Lexus plans on opening it up slowly to other regional dealerships, as its target market gets larger and younger every month. If this all sounds vaguely familiar, it’s because Scion recently announced that it will roll-out a similar program in upcoming months, with a more budget-oriented consumer in its sights. But regardless of who the target market may be, there is no denying that people are busy and don’t like to beat around the bush, so if that NX 200t F-Sport costs $40,000 with all the bells and whistles, then thank you for letting us know that instead of wasting our time by playing a numbers game.

But there are some inherent risks associated with a move of this sort. Even the most well thought-out pilot program can cost millions if it is not orchestrated properly; dealerships and employees have to be 100% on board, as consumers will know something is up if salespeople aren’t showing the same courtesy or enthusiasm one comes to expect when buying a car of this caliber. There also is the issue of who to go to if the local Lexus dealer doesn’t offer haggle-free buying, forcing you to travel some distance to get the experience you rightfully deserve.

However, we don’t think this technique will be a flop, because everyone nowadays researches a big purchase online prior to checking it out in stores, and the same goes for car buying. All that is needed at the dealership is a quick test drive, some identification checks, and an initial bank deposit; you’ve wanted a Lexus RC F from the moment you first laid eyes on it in the Cheat Sheet’s initial test drive and review, and now you got it for the right price and everyone is happy.

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