So far, 11 of the 236 U.S. Lexus dealerships have adopted the no-haggle plan, said Matt Kaleba, the brand’s national marketing manager. In the future, additional dealerships will be able to opt in and receive staff training and consulting services from Lexus.
To encourage recalcitrant dealers, the company’s Lexus Plus program comes with an additional set of incentives. As it helps dealers move toward no-haggle pricing, Lexus also helps them reorganize their operations to offer customers additional amenities, such as a salesman trained to also handle their financing paperwork, and a single point-of-contact representative for all their service requests.
In effect, Lexus Plus shifts manpower away from the finance departments that once presided over price negotiations and served as a major profit center for the dealerships, and moves it into customer service.
The Lexus of Omaha dealership is on the west side of town, a few hundred yards from the famous Boys Town home for at-risk children. Rebuilt in 2014, its main showroom features two-story glass windows on three sides, and a portion of the back wall covered with various shades of climbing ivy.
The dealership is part of Baxter Auto, a family-owned conglomerate of 22 outlets in Omaha and Lincoln, Nebraska; Kansas City, Missouri; and Colorado Springs, Colorado. Those dealerships offer 19 brands, including Lexus, Toyota, Honda, Mercedes, Volkswagen, Ford and Chrysler.
Mickey Anderson, who owns Baxter with his sister Angie, said he needed four years of preparation to switch to no-haggle pricing. One reason: Salesmen now receive a flat fee for each car sold rather than having their compensation vary depending on the outcome of talks with each customer. Many dealerships, he said, don’t want to embark on that kind of painstaking reorganization at a time when sales and profits are booming.
Cutting Time
The deals that Lexus of Omaha offers today, he said, are basically the same as those customers could achieve after haggling their way through the old system. But he said he hopes they can complete the transaction in less than two hours, or half the time needed for the traditional approach.
During the first full sales month with the no-haggle plan, Anderson sold 1,200 vehicles at Lexus of Omaha, up 9 percent from last year’s monthly pace. He said he hopes to be selling 1,500 a month by 2018.
“I joined the company in 1990,” Anderson said, “and I knew it was wrong then that wives had to bring in their husbands because, ‘Oh, by the way, if you’re not a man you may not be able to get the best deal that could be made.’’’