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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.

Bosch builds an infotainment system that just might not suck

As far as we've come with in-car infotainment and interfaces over the past decade or so, we still have a long way to go — as most current systems show. Whether it's high-end brands like Mercedes-Benz with its kludgy COMAND system, which we hope will be replaced with the MBUX platform revealed at CES, or more mainstream vehicles like Hondas (with their frustrating, knobless Display Audio interface), getting the kind of content and ease of use in the car that we're used to having on other connected devices is far too complex and sometimes costly. While Apple and Google have tried to ride to the rescue with CarPlay and Android Auto, respectively, they're limited solutions. No automaker or tech supplier has been able to deliver an easy, economical, flexible and non-distracting infotainment solution. But Bosch could be closing in on this elusive goal, given the digital cockpit concept demo I recently received at CES. Displayed in a Cadillac Escalade, the concept featured five interconnected color screens: one in the instrument cluster, two in the center console, and two more in the front-seat headrest for second-row passengers. The digital cockpit concept demo had cool features such as haptic-feedback touch-screen controls that created an edge-like feeling similar to a physical button, facial recognition to confirm driver credentials, and the intelligence to know the location of a phone in the car to lock it out to keep the driver from texting. The most significant aspect of the Bosch digital cockpit concept wasn't visible — but shows the company's vision for a future of seamless, convenient, cost-effective and safe in-car infotainment. It's powered by a single electronic control unit (ECU) that can simultaneously run multiple operating systems and also separates vehicle and infotainment controls for critical safety and cybersecurity reasons. Most modern cars can have as many as 100 separate ECUs, Philip Ventimiglia, product manager for Bosch Car Multimedia North America, explained at CES, and several just for infotainment functions. "The goal is to reduce that to about 10 so that we can save cost throughout the vehicle and enable new technologies," he added. "OEMs want to put more technology into cars, but it costs money," Ventimiglia said.

What if the mid-engine Corvette is really a Cadillac?

Call me crazy, but I'm not convinced the mid-engine Corvette is the next Corvette. The rumor is strong, yes. And, contrary to some of the comments on our site, Car and Driver - leader of the mid-engine Corvette speculation brigade - has a pretty good record predicting future models. But it's another comment that got me thinking: or maybe it's a Cadillac. There is clearly something mid-engine going on at GM, and I think it makes sense for the car to be a Cadillac. First off, check out how sweet the 2002 Cadillac Cien concept car still looks in the photo above. Second, there are too many holes in the mid-engine Corvette theory. There are too many holes in the mid-engine Corvette theory. The C7 is relatively young in Corvette years, starting production almost three years ago as a 2014 model. Showing a 2019 model at the 2018 North American International Auto Show would kill sales of a strong-selling car before its time. Not to mention it would only mean a short run for the Grand Sport, which was the best-selling version of the previous generation. More stuff doesn't add up. Mid-engine cars are, in general, more expensive. Moving the Vette upmarket leaves a void that the Camaro does not fill. There's not much overlap between Camaro and Corvette customers. Corvette owners are older and enjoy features like a big trunk that holds golf clubs. Mid-engine means less trunk space and alienating a happy, loyal buyer. Also, more than 60 years of history. The Corvette is an icon along the likes of the Porsche 911 and Ford Mustang. I'm not sure the car-buying public wants a Corvette that abandons all previous conventions. And big changes bring uncertainty - I don't think GM would make such a risky bet. Chevrolet could build a mid-engine ZR1, you might say, and keep the other Corvettes front-engine. Yes they could, and it would cost a ton of money. And they still need to fund development of that front-engine car. I highly doubt the corporate accountants would go for that. But a Cadillac? Totally. Cadillac is in the middle of a brand repositioning. GM is throwing money at this effort. A mid-engine halo car is the just the splash the brand needs to shake off the ghosts of Fleetwoods past. And it's already in Cadillac President Johan De Nysschen's playbook. He was in charge of Audi's North America arm when the R8 came out. A Caddy sports car priced above $100,000 isn't that unreasonable when you can already price a CTS-V in that range.