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Dealers mobilize to protect their margins from automaker subscription services

Six individual auto brands — Lincoln, Cadillac, Porsche, Mercedes, BMW and Volvo — have established or are trialing a vehicle subscription service in the U.S. Three third-party companies — Flexdrive, Clutch and Carma — run brand-agnostic subscription services. And three automakers — Mercedes-Benz, BMW, and General Motors — have also launched short-term rental services. Dealers, afraid of how these trends might affect their margins, are building political and lawmaking campaigns to protect their revenue streams. So far, three states are investigating automaker subscriptions, and Indiana has banned any such service until next year. It's certain that those three states are the first fronts in a long political and legal battle. Powerful dealer franchise laws mandate the existence of dealers and restrict how automakers are allowed to interact with customers to sell a vehicle. On top of that, Bob Reisner, CEO of Nassau Business Funding & Services, said, "Dealers and their associations are among the strongest political operators in many states. They as a group are difficult for state politicians to vote against." In California earlier this year, the state Assembly debated a bill with wide-ranging provisions to protect against what the California New Car Dealers Association called "inappropriate treatment of dealers by manufacturers." One of those provisions stipulated that subscription services need to go through dealers, but that item got stripped out when dealers and manufacturers agreed to discuss the matter further. In Indiana, Gov. Eric Holcomb signed a moratorium on all subscription programs by dealers or manufacturers until May 1, 2019, to give legislators more time to investigate. Dealers in New Jersey have taken their campaign to the state capitol, asking that the cars in subscription programs get a different classification for registration purposes. Automakers run the current subscription services and own the vehicles. Sign-ups and financial transactions happen online or through apps, leaving dealers to do little more than act as fulfillment centers to various degrees, with little legal recourse as to compensation amounts when they're called on to deliver or service a car. That's a bad base to build on for business owners who've sunk millions of dollars into their operations.

BMW gearing up for Sochi Olympics with bobsled documentary [w/video]

BMW might be a German brand, but that isn't keeping its US branch from helping out Team USA as the 22nd Winter Olympics gets set to kick off in Sochi, Russia next month. We last reported on BMW's partnership with Team USA's bobsled team in November of 2012, but with barely a month until the opening ceremony, it's about time we hear something new about the team's progress. And that's exactly what's going to happen when Driving on Ice airs this Sunday afternoon. The documentary charts the progress of the Team USA/BMW partnership to redesign the team's two-man bobsled for an event in which the USA hasn't captured gold in since 1936. And if you're concerned that this will be nothing more than a long advertisement for BMW, then you'll enjoy knowing that the program has more to do with the Team USA bobsledders than with the automaker. Even the trailer stars a number of team members and coaches, along with BMW DesignWorks USA's Michael Scully, lead designer on the program. There's a short preview embedded below, so if you just can't wait for next month's Olympics to kick off, you'll want to tune into NBC at 12:30 pm (Eastern time). Scroll down to watch the video preview and check out the full press release from BMW. BMW Slides into 2014 Winter Olympic Year with Announcement of U.S. Olympic Marketing Campaign, Bobsled Documentary. "Driving on Ice," a Film About BMW's Redesign of the Team USA Two-man Bobsled, to Air This Sunday on NBC. Woodcliff Lake, NJ – January 3, 2013... BMW of North America, the Official Mobility Partner of the United States Olympic Committee (USOC), today announced its U.S. Olympic marketing campaign for the Sochi 2014 Olympic Winter Games which includes a series of Olympic-themed advertisments, consumer and retail activations, social and digital media executions, and a national drive campaign to benefit Team USA. In addition, a documentary on BMW's complete redesign of the U.S. two-man bobsled entitled "Driving on Ice" will air this Sunday, Jan. 5 at 12:30 p.m. EST/11:30 a.m. CST on NBC. "Driving on Ice" chronicles BMW's collaboration with the USA Bobsled & Skeleton Federation (USBSF) to deliver a fleet of six new two-man bobsleds, applying the automaker's world-class design and engineering expertise to help Team USA chase its first Olympic gold medal in the event since 1936.

Consumer Reports criticizes small turbo engines for misleading performance, fuel economy claims [w/video]

Consumer Reports has taken aim at at small-displacement, forced-induction engines, saying the powerplants don't manage to deliver on automaker fuel economy claims. Manufacturers have long held that smaller, turbocharged engines pack all power of their larger displacement cousins with significantly better fuel economy, but the research organization says that despite scoring high EPA economy numbers, the engines are no better than conventional drivetrains in both categories. Jake Fisher, director of automotive testing for Consumer Reports, says the forced induction options "are often slower and less fuel efficient than larger four and six-cylinder engines."
Specifically, CR calls out the new Ford Fusion equipped with the automaker's Ecoboost 1.6-liter four-cylinder engine. The institute's researchers found the engine, which is a $795 option over the base 2.5-liter four-cylinder, fails to match competitors in acceleration and served up 25 miles per gallon in testing, putting the sedan dead last among other midsize options.
The Chevrolet Cruze, Hyundai Sonata Turbo and Ford Escape 2.0T all got dinged for the same troubles, though Consumer Reports has found the turbo 2.0-liter four-cylinder in the BMW 328i does deliver on its promises. You can check out the full press release below. You can also read the full study on the Consumer Reports site, or scroll down for a short video recap.