Has TESLA's Direct Sales Model Brought Upon THIS? Lexus To Offer Haggle-Free Pricing Starting In Q1 2016

When Tesla (TSLA) decided to have a direct sales model, it created waves in the automotive industry. Instead it decided to operate a bit differently with its retail outlets popping up in peculiar places, like malls. Of course with this direct sales effort, Tesla embraced an idea from the technology space: a flat price that's non negotiable.

Similar to picking up an Apple product at a retail location, the price is what it is.

Now it sounds like Lexus is about to embark in an experiment to do the same thing. According to The Detroit Free Press, the company has hand selected about a dozen Lexus dealers nationwide to participate in a 2016 pilot program. It is slated to begin in Q1.

If it goes successfully it is expected to be rolled out across ALL of Lexus' dealers.

So, what say YOU? Is Tesla the cause of this, or is this merely another marketing angle for Lexus to try and stay ahead of the luxury competition?

Lexus is introducing negotiation-free dealerships as a way to differentiate its dealer experience in a field where the competition has closed the gap in offering a premium experience, said Jeff Bracken, general manager of Toyota's Lexus luxury division.

Bracken announced today at the Center for Automotive Research Management Briefing Seminars that a dozen handpicked Lexus dealers will start a pilot project where prices for new and used cars as well as parts and service have set prices that are not subject to negotiation

Dealers must be willing to let customers walk away if they don't like the set price. Bracken said he expects a dip in sales and share in the short term but that should only last a couple months until customers get used to the new pricing strategy...

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TomM - 8/8/2015 8:17:18 PM

+1 Boost

Nonsense - this is NOT something new
When GM first opened Saturn - they sold their cars that way - long before Tesla. And THAT was not the first time it was tried either. AND it was not the last time it will FAIL either. As far as I am concerned - it is price fixing (Unlike Tesla which owns all its outlets - Lexus dealership are independently owned).

The most major problem that this does not solve - is the Value given for a trade in - something Lexus CANNOT legally set. So - there will be negotiations - it will just not be with the price of the car - but with the price of the trade in.

Of course the other problem is - they have competitors - who do not work under that system - and people who will walk - will walk to another BRAND of car. Unless of course the SET price is really really low. But that will not be the case.

The last problem is PRODUCT. IF the product needs price to make it competitive - or the cars sit on the lots - do you really think a dealer is not going to attempt to sell a car?

MDarringer - 8/8/2015 8:32:33 PM

-1 Boost

Price gouging and cash raping of customers.

Weapon - 8/8/2015 9:02:40 PM

+2 Boost

Tesla sells cars directly at inventory price, on top of that, any car that is "on lot", Tesla discounts by age and miles. So Tesla is not just offering haggle free prices but more than that.

Will Lexus and their dealers sell to consumers at inventory price and discount lot cars by age and miles? I am pretty confident that won't be the case.

MDarringer - 8/8/2015 9:09:24 PM

-1 Boost

You're delusional! They are not selling at invoice. They are selling at inflated invoice. You have no idea of what invoice means. Tesla=cash rape.

ExGC - 8/9/2015 9:11:27 AM

+2 Boost

This isn't price fixing - that's when two competitors agree to set prices. This is resale price maintenance and that was illegal (at least when explicit and imposed on independent sellers) until about 10 years ago, when the law changed due to a Supreme Court case. Now, it is legal under federal law unless in practice it harms competition.

MDarringer - 8/9/2015 11:03:24 AM

0 Boost

It is price fixing because if I don't like the price I cannot go to another dealer and bargain a better price.

About invoices...

People also don't truly understand invoice price either. The dealer invoice is rarely the actual cost of the vehicle to the dealer. You may think that $25K car has an invoice of $22K because of your handy dandy iPhone app, but quite often there is an after-sale bonus that the dealer gets for selling the car that makes the actual invoice lower. That bonus is a part of the invoice price.

The actual cost to make the car is much much much lower than the invoice.

Sparty - 8/17/2015 8:35:58 PM

+1 Boost

from MDarringer: "It is price fixing because if I don't like the price I cannot go to another dealer and bargain a better price."

This not a bash but an observation, but why worry about splitting pennies and worrying about the exact amount a company pays for a product you desire? What business in the United States operates and stays that way that sells their popular product at a loss?

It can't be "price fixing" because you can vote with your wallet and simply not buy that product...PG&E, now that's price fixing.

If you want to genuinely have a positive experience, then go in, say "I want that one", pay the fair market price then drive away. Anything more is in your head, so try to think outside the box and try to understand why the car companies operate the way they do...because buyers desire to "rip them off".

Correct me if I'm wrong.