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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.

Autoblog Podcast #403

Episode #403 of the Autoblog Podcast is here, and this week, Dan Roth, Michael Harley, and Ronnie Fung of Autoblog Canada talk about the $5 billion investment Ford is making in Lincoln, the McLaren 650S, and the best apps for drivers. We start with what's in the garage and finish up with some of your questions, and for those of you who hung with us live on our UStream channel, thanks for taking the time. Check out the rundown below with times for topics, and you can follow along down below with our Q&A. Thanks for listening!
Autoblog Podcast #403:
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Lincoln Aviator debuts as stylish 3-row crossover with a surprise

NEW YORK — At a studio in the Meatpacking District in Manhattan, after a walk through an "art gallery" full of inspiration for Lincoln's newest midsize, three-row Aviator crossover, we saw the company's future. That's not breathless hyperbole, either. Lincoln's huge Navigator is selling like gangbusters, but the aging MKT is a sad vestige of the company's last attempt to reinvent itself. The company needs an attractive, well-proportioned three-row with contemporary powertrains to complement the MKC and the larger Nautilus (nee MKX). For those wondering, the MKC is likely to get renamed at its next refresh, and the lousy MK__ naming convention will finally die. But while the names are refreshing, that's not the reason the Aviator is so important. For one, it'll almost certainly lend its underpinnings, which are rear-wheel-drive based, to the next Ford Explorer. The other is that it's an all-important three-row, a conventionally-shaped one rather than the awkward MKT's long, lumpy look. The Aviator — the vehicle we saw is a preview, not a production model, but is extremely close to production — has style and presence. There's more than a bit of Range Rover Velar in the look, but it's not a clone. And the interior is a wonderful interpretation of the larger Navigator's bold, distinctive and purely American look. View 20 Photos While many, many details are unspecified at this stage — including exact engine details, dimensions, and the like — there's enough there to draw some conclusions about the new Aviator. For one, it's got a version of the Navigator's elegant interior. Those Perfect Position seats, also seen in the Continental, covered with soft leather, are central to the Aviator's interior experience. When's the last time beautiful seats were such a selling point? Other than Volvo, no one's put enough attention on unique and particularly comfortable seats. It's a unique selling proposition and, also, a nice aesthetic detail. You could say the same for the dash design: It's low and sleek, with solid but not bulky elements and the sort of tastefulness normally reserved for Scandinavian industrial design. Back to the rear-drive platform and what little else we know of the powertrain. For one, it'll feature a twin-turbocharged EcoBoost engine with an available plug-in hybrid option. As far as we can tell, both versions will use the same engine, and there are no optional engines outside of this.