Dealer Lesson: JM Lexus, the Most Successful Lexus Dealer In America, Is a No-Dicker-Sticker Store
Half an hour from Fort Lauderdale, in Margate, Florida, sits JM Lexus, the highest-volume Lexus dealership in the United States.
Even by Lexus standards, where throughput is the best of any premium automaker operating in America, JM Lexus’ 8,000-unit new vehicle sales tally in 2016 was striking. That’s more than 150 new luxury cars, crossovers, and SUVs sold each week. That’s roughly six times the volume achieved by the typical Lexus dealer.
And JM Lexus, perennially the top Lexus dealer in America, does so as part of the Lexus Plus strategy: no negotiating, a single representative per customer, fixed prices for new and used cars as well as service fees and accessories.
Perhaps there’s a lesson to be learned by Lexus’ other dealers. For the time being, according to Automotive News, only 5 percent of Toyota’s premium brand stores operate under the Lexus Plus model.
For car dealers, adopting a fixed-price model is no mere alteration of the status quo but rather a wholehearted transformation. The upsides are significant: more satisfied employees, happier customers, and greater profit. Satisfied employees don’t leave in search of greener grass on the other side of the fence. Happy customers return for their next vehicle. Greater profits can be reinvested back into the dealer, creating an even better space for employees to work and for customers to buy. A better space in which employees work and customers buy consequently makes for more satisfied employees and happier customers, and so the cycle continues.
But just as the upsides are significant, the downsides are well known. “If you’ve got personnel that are used to doing business very traditionally, they may not fit into the Lexus Plus process,” Lexus’ Greg Kitzens, general manager responsible for future initiatives, told Automotive News.
Indeed, personnel accompanied to a competitive environment won’t be pleased when customers negotiate a better deal on an RX350 at the Lexus dealer one town down the highway. The same group of existing employees, potentially older employees, would also need to be trained in areas such as F&I, areas in which they’ve never worked. In search of a more satisfied staff, dealers making this major transition might just discover a particularly unsatisfying metamorphosis.
Switching to Lexus Plus “was major disruption to our business,” says Peter Cooper of Allentown, Pennsylvania’s Lexus Of Lehigh Valley. “It took everything we learned over the last 35 years as a dealership group and threw it out the window.”
For JM Lexus in Margate, Florida, adopting the Lexus Plus strategy served to bring factory support to an approach that was already in place. JM Lexus was already the top Lexus dealer in America thanks to success the store enjoyed with a similar strategy prior to Lexus Plus.
“It’s a toll on our customers, but mostly on our associates,” JM Lexus general manager Jim Dunn says of selling 150 new vehicles per week. “We really want this dealership to reflect a culture that’s caring, that’s sensitive to what our associates need and what our buyers today are really demanding.”
That’s a toll many other Lexus dealers would be happy to pay. Regardless of whether JM’s fellow Lexus stores adopt the Lexus Plus strategy soon, it’s likely they will eventually end up with the same format.
“[Lexus] always play the long game,” NADA consultant Mark Rogers says.
According to Lexus HQ’s Kitzens, this is no experiment. “It’s one of these things where you’ve really got to burn the ship,” he says. If, after the ship is burnt, more Lexus dealers reap the kinds of benefits enjoyed by Florida’s JM Lexus, the gain will have been worth the pain.
For the time being, Lexus is looking back on seven consecutive months of U.S. sales decline; on 13 year-over-year sales decreases in the last 14 months. If boom times made blowing up the traditional sales model difficult, perhaps lean times will present Lexus Plus with some more early adopters.
More by Timothy Cain
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