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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 reveals new seven-seat 2 Series Gran Tourer [w/video]

Everything is turning up Gran over at BMW these days. The 4 Series and 6 Series sprout extra doors to become Gran Coupes. The 3 Series and 5 Series get weird rooflines to become Gran Turismos. And now the 2 Series Active Tourer has grown an extra row of seats to become the Gran Tourer. What we're looking at is essentially the same mini-minivan/tall-hatchback that emerged almost exactly a year ago as the first front-drive model in BMW's history. Only in the guise of the new 2 Series Gran Tourer, it's been stretched to accommodate that third row of seats to give it seven-seat capacity – which was to be expected, of course, but is still fairly impressive considering how compact this vehicle actually is. It may be less than ten inches longer than the five-seat Active Tourer, but it's still smaller than just about any seven-seater on the market, and to hear the Bavarians tell it, it's "the world's first premium compact model to offer up to seven seats." Those seats are optional and can fold under the floor, and the middle row splits 40:20:40 and folds flat at the push of a button to give the 2 Series Gran Tourer a flexible cargo capacity ranging from 22.7 cubic feet all the way up to 67 cu ft. All of that in a vehicle no longer than a Ford Focus, which even in European wagon form can only swallow 53 cu ft with the seats folded – and you can forget about the extra seats in the Focus. European buyers will be able to choose between five engine options with three or four cylinders and ranging from 116 horsepower to 192. Available all-wheel drive might make you forget it's riding on a front-drive platform altogether (but not likely). Either way, the five-seat Active Tourer hasn't found its way to US showrooms, so we won't expect to see this new seven-seat version here either. At least not for the time being. But we'll surely have the chance to check it out in person for you next month at the Geneva Motor Show. The new BMW 2 Series Gran Tourer. 11.02.2015 With the new BMW 2 Series Gran Tourer, BMW has carved out yet another new vehicle segment. With its generous space, versatility and groundbreaking flexibility, the BMW 2 Series Gran Tourer is the world's first premium compact model to offer up to seven seats and fully meet the mobility requirements of young families. Compact yet capacious.

BMW warns profits will fall, plans $13.6 billion in cost-cutting

FRANKFURT, Germany — BMW said Wednesday that profits in 2019 will be "well below" last year's, and it will cut 12 billion euros ($13.6 billion) in costs by the end of 2022 to offset spending on new technology. The company said profits would be eroded by higher raw materials prices, the costs of compliance with tougher emissions requirements and unfavorable shifts in currency exchange rates. The Munich-based automaker also faces increased uncertainty due to international trade conflicts that could lead to higher tariffs. "Depending on how conditions develop, our guidance may be subject to additional risks; in particular, the risk of a no-deal Brexit and ongoing developments in international trade policy," said Chief Financial Officer Nicolas Peter. The company forecast a profit margin of 6 to 8 percent for its automotive business, short of the long-term strategic target of 8 to 10 percent, which it said still "remains the ambition" for the company if given "a stable business environment." BMW said it had no plans for layoffs even as it outlined cost saving measures that include dropping half of its engine variants as it seeks to reduce product complexity. The BMW, Mini and Rolls-Royce brands are to get a single sales division. Peter said that given the headwinds to earnings, "we began to introduce countermeasures at an early stage and have taken a number of far-reaching decisions." The company said the measures were needed "to offset the ongoing high level of upfront expenditure required to embrace the mobility of the future." Automakers around the world have faced heavy up-front costs for technology expected to change how people get from one place to another in the next decade. Those include electric cars and renting cars through smartphone apps. Yet the returns from such investments remain uncertain and auto companies face competition from tech firms such as Uber and Waymo. BMW made 7.2 billion euros ($8.2 billion) in net profit last year, down 17 percent from 2017, when it booked a gain of $1 billion from U.S. tax changes. The company faced headwinds from increased tariffs on vehicles exported to China from the United States. It also suffered from turmoil on the German auto market when companies faced bottlenecks getting cars certified for new emissions rules. BMW faces uncertainty from U.S.-China trade tensions that could result in new tariffs if talks do not result in an agreement. U.S.