First Texas Honda was the first Honda franchise granted in the Lone Star State back in 1971, but its performance hasn't always been first-rate.
It was a sleepy sidewalk dealership with a three-car showroom. Through much of the early 2000s, the store's throughput ranked third among the three Honda dealerships in the Austin area. The haggling and rancor on the sales floor were so bad, employees wouldn't send friends or relatives to their own dealership.
"We were a high-gross store, with a high net-to-gross," said dealership President Jim Olmstead. "But everyone would go home whipped -- the salesmen, the managers and especially the customers."
But things have changed since Olmstead instituted one-price selling in 2010, just before First Texas Honda moved into a massive new facility in Austin that accommodates 80 vehicles, a 100-bay service department and even a concert sound stage where an employee band performs -- all on a 20-acre parcel.
Since instituting one-price selling, the store has jumped from 380th among Honda dealerships in terms of sales volume to the top 30, and from selling 200 new and used vehicles a month to 450.
"I've been in the car business 45 years, and the first 43 years was the same crap: Start the deal as high as you can, steal the trade-in, wear out your customers, wear out your salesmen," Olmstead said. "Now we have a system we feel good about, where you can send your mom or dad."
First Texas Honda is part of Continental Automotive Group, which includes Mercedes-Benz, Infiniti and Subaru franchises in Austin. The Honda dealership is giving upscale touches to a mass-market store. The giant sales floor, delivery area and service area are indoors and air-conditioned, a huge plus in Texas summers.
But the one-price system was the turning point. Olmstead says vehicle sales negotiations as practiced by First Texas Honda weren't making the dealership many friends.
"It seems like everyone is looking for the one customer who hasn't gone on the Internet," Olmstead said. "Instead of hiding from technology, we embrace it and show it to them.
"People don't mind us making a little money, but they don't want to be the person who gets their heads knocked off. We don't hit any home runs, but we hit lots of singles."
Still, one-price came at a price. When the change was made, many longtime salespeople walked out. So did a couple of managers. Even Olmstead, now 65, considered retiring rather than starting over at square one. But his curiosity got the better of him and he stayed.
First Texas Honda retrained its remaining sales staff and brought in new people with no car retail experience.
"I didn't want to have to break old habits," said Co-General Manager Andrea Baker, who joined the store as a finance manager in 2007 and now oversees the sales side. "I hire the Apple Store-type: young, friendly and customer-oriented. This is not about selling, because the car will sell itself."
Not only is the store one-price, the prices are listed on the store's Web site. Baker handles all the pricing, to determine the store's grosses.
"We kept hearing we weren't going to make any money," Baker said. "But the Honda new-car department is the most profitable department -- net, what we take to the bank -- of any dealership in the Continental Auto Group."