Sonic plans to leave haggling far behind
All stores could adopt 1-price model by 2016
Sonic Automotive Inc. will eliminate haggling as it launches a customer-experience initiative at its dealerships this summer.
Town and Country Toyota in Charlotte, N.C., will be Sonic's first store to adopt one-price selling beginning in July. By 2016, all Sonic stores, 105 at current count, will be converted to one-price selling, "God willing," said Jeff Dyke, Sonic executive vice president of operations. That's when the company intends to have its One Sonic, One Experience initiative fully implemented.
Sonic is No. 4 on Automotive News' list of the top 125 U.S.-based dealership groups ranked on 2013 new-vehicle retail sales units.
The move to one-price selling is an evolution of Sonic's True Price strategy, which was rolled out to all stores in early 2013. True Price sets vehicle prices within $300 of the company's lowest acceptable transaction price.
Taking the next step, to eliminate price negotiations, will improve customer satisfaction, reduce transaction time and ultimately increase market share, Sonic executives say. They don't want three customers paying three different prices for the same car at the same store.
"Why is that? When you go into a shoe store, do we all pay three different prices for a pair of Nikes?" Dyke said. "Negotiations going back and forth and all that crap -- we want to get out of all that. We don't see a need for it, and neither does the consumer."
But the change will place a bull's-eye on Sonic's back. Competitors often relish such practices, saying they will undercut the fixed price all day long and win those sales for as little as $100 less.
While that's true, Dyke said, the Sonic move will be different because of the changes coming with One Sonic, One Experience. A customer will work with a single employee using an iPad and should be able to complete a transaction in less than an hour, getting a better overall experience, he said. And Sonic still will adjust prices on a weekly, or even daily, basis to make sure its set prices are competitive in the local market. But it won't wiggle on price after talks with a customer begin.
Sonic is almost to that point in many stores, Dyke said. Though True Price allows wiggle room of $300, the company is averaging less than $200 across the board. Some stores, particularly luxury-brand dealerships such as Mercedes-Benz and BMW, already are effectively operating as one-price sellers, he said.
Sonic is experimenting with a way to retain flexibility for customers seeking a better deal. In April, it launched a pilot called True Price Match at its Economy Honda store in Chattanooga. The program lets store managers cut a price if a customer brings in an invoice from a competitor for the same car with the same equipment for less.
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