Will Toyota Go to Fixed Pricing Like Lexus?

[Jetboy]

The Car Dealer Who Schooled Lexus in Art of the No-Haggle Sale - Bloomberg Business

Lexus is testing - and I expect them to move the entire brand to that model. Scion is pretty much there.

Thoughts? Will Toyota go that route? If so will the MSRP drop to something that looks more like invoice price?

 

[Peyto]

I would expect if Toyota (or any other company) did this, they would hold their total profits constant, and therefore set prices somewhere in between invoice and MRSP. The winner in this scenario are those who pay close to MRSP, the losers are the enthusiasts who know how to negotiate with dealers, while everyone else who pay something in the middle are mostly unaffected.

Clearly people are sensitive about being ripped off, and therefore put a value on knowing that everyone else paid the same as them, but aren't willing to put in the time to do the research. That demographic doesn't show up on enthusiast forums but they're out there!

 

[Engineer]

I hope so, negotiations with dealers are a waste of time for all involved and I would venture to guess that the ones most effected are the ones who can afford it the least.

 

[Jetboy]

FWIW, I really like that model of sales. I bought my last 2 cars from fixed price dealers. No negotiation. Non commission sales. I think people would go for it. I think it'll be a hit for Lexus.

 

[BLACK-FL4RUNNER]

Wasn't that originally what the Saturn dealers did?

 

[Jetboy]

Wasn't that originally what the Saturn dealers did?

yep.

I think the success of that business model is heavily dependent on your demographic of consumer. I'm not sure it would work for the demographic who like to feel like they got a really good deal. $10k off of a car to me means it was way overpriced to begin with. To someone else that might make them feel like they got a great bargain

So I don't know if the same model would work for domestic manufacturers as well as it might for Toyota, Honda, or Subaru dealers.

 

[BLACK-FL4RUNNER]

I believe Saturn got away with it because they didn't have any competition between dealers. The dealer network was so spread out. Most of the current manufacturers have multiple dealers located within the same town, or within a 30 minute drive.
Scion, as I understand it, sets a minimum price the vehicle can be retailed for. This effectively stops dealers from undercutting each other, except on paper with your trade.

Can Toyota pull it off? Maybe. Could GM/Ford? Not a chance with their saturated dealer network.

 

[SR5Bart]

Scion does pure price it's a part of their motto. Every scion gets built the same at the factory except color. Then the buyer customizes it to their own liking

 

[kboxvegas]

Fixed pricing only benefits one party, and it is not the buyer.