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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.

Farley says Lincoln learnings in China could influence brand in US

Automotive News reports Lincoln is looking to Chinese luxury shoppers for customer service ideas. Those notions may eventually make their way back to the US in the form of new dealership training. Jim Farley, the executive vice president of global marketing for Ford, tells Automotive News, "In many ways, China will be a listening post for Lincoln in the United States. Soon China will be the largest luxury market in the world." Farley also said that in China, the Lincoln brand is currently where Lexus was when the Japanese brand first landed in the US.
Lincoln is slated to open its first Chinese dealerships in 2014. The brand is largely unknown in Asia, and Lincoln representatives have been visiting other luxury dealers in China for an idea of what buyers there expect. Lincoln has also studied non-automotive luxury shopping, paying special attention to high-end retail branding.
Of course, this whole song and dance feels awfully familiar. Lincoln has focused heavily on remaking the brand and recrafting its marketing here in the States, thus far without sufficient product to back the play. Lincoln is already late to the China game, and without the necessary products to lure buyers away from established bodies like Buick and Cadillac, Lincoln may be doomed to repeat its fate here in the US.

Ford recalls 382k vehicles across six campaigns

Ford needs to repair a total of 381,633 vehicles in North America across six newly announced campaigns, including five safety recalls and one compliance recall. By far the largest of these campaigns covers the 342,271 examples of the 1998-2003 Windstar to double check an earlier recall repair. Among these, 283,413 are in the US and 58,858 are in Canada. The combination of corrosion and stress can cause cracks in the rear axle and eventually lead to the part to snap completely. The company reports a small number of accidents might be connected to this, but there are no injuries. The minivans were recalled for this issue back in 2010, and it was investigated by NHTSA. According to Ford's latest announcement, the reinforcement brackets on some of these models might not have been installed correctly. This time, dealers will perform an inspection. Minivans with incorrectly installed brackets will get a new rear axle. The rest of the owners will be offered a deal to replace the part at a reduced cost. The next largest campaign covers 36,857 examples of the 2015 F-150 to fix a problem with the adaptive cruise control. Specifically, there are 33,481 affected trucks in the US, and 3,376 in Canada. According to Ford, "when passing a large, highly reflective truck" the radar in the system can misidentify a semi as being in the same lane as the pickup. The collision warning system would then activate, slowing the F-150. There's one report of an accident with this happening but no injuries. The fix is simply an update to the adaptive cruise control module software. Ford also has a recall for 1,477 examples of its 2016 F-53 and F-59 stripped chassis models, and they're all located in the US. A manufacturing issue might allow the trucks to shift into reverse without the driver first applying the brakes. There are no reports of any accidents from this, though. To repair the problem, the models get a new transmission shift control bracket and an adjustment to the shift cable. The Blue Oval's safety compliance recall covers 708 examples of the 2016 Fusion and Lincoln MKZ, including 658 of them in the US, 28 in Canada, and 22 in Mexico. On these models, a manufacturing problem with the fuel tank could allow it to crack in a crash, which isn't allowed under federal rules. There are no reports of accidents, injuries or fires. The fix will be a new fuel tank for all of them. The company is also repairing 251 units of the 2015 Taurus and Lincoln MKS, plus the 2016 Explorer.