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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.

2020 Lincoln Navigator cut to three trims, starts at $77,120

Lincoln has reworked the Navigator lineup for 2020, a brand spokesperson telling Cars Direct it wants to make ordering the luxury SUV "even more effortless for clients." That means shedding one of the four current trims, the Select, and rearranging pricing for the three remaining variants. The entry-level Navigator Standard starts at $75,825 before the $1,295 destination charge, the total coming to $77,120. The figure represents a $2,620 increase over the 2019 model year, but as we reported earlier, Lincoln added a number of new features for 2020. Convenience items such as power running boards, heated and cooled front seats, wireless phone charging, and Lincoln's Phone as Key system are standard throughout the range. Every 2020 Navigator will also get the driver safety suite CoPilot360. That technology isn't available on the 2019 Navigator Standard, and requires the $2,640 Technology Package on the Select trim, which is already $4,000 more expensive than the base trim. With the Select gone, the next trim up is Reserve. Lincoln says 90 percent of customers choose the Reserve or Black Label trims, and any buyers planning on the former will think 2020 a good year. The Reserve could only be had as a 4x4 in 2019, but adds a 4x2 powertrain for 2020 and lowers its price. It will start at $82,660 in two-wheel-drive guise, making it $3,830 less than the 2019 model with all-wheel drive. The Reserve 4x4 will cost $85,330, for a discount of $1,170 compared to 2019. The 2020 Navigator Reserve will also add the option of a Monochrome Package, which eliminates chrome on trim like the grille and side vents, making them body color instead. It also paints the mirror caps in the body color and swaps out for 22-inch, 12-spoke black painted wheels. We don't know pricing on that yet, but the package will only be available in Pristine White, Ceramic Pearl (gray), or Infinite Black.   The extended Reserve L in 4x2 form starts at $85,860. Cars Direct didn't break out a price for the Reserve L 4x4, but assuming the $3,200 price difference between the 4x2 models holds, the price would be $88,530. That's the same $1,170 discount as on the non-L Reserve trims.    The top-shelf Black Label sticks to a 4x4-only formula, and goes up by just $375 for both regular and L versions. The regular 2020 Black Label trim will cost $98,065, the Black Label L will cost $101,265.

Ford Q3 pretax profits drop to $1.18B

Following positive third quarter financial results recently from General Motors, rival Ford took a tumble in Q3. The automaker posted pre-tax profits of $1.18 billion, compared to about $2.59 billion in Q3 2013, a drop of around 54 percent. Net income also suffered with $835 million made in the quarter, versus $1.272 billion last year, a decline of about 34 percent. The Blue Oval blamed the gloomy figures on three reasons in its release: "lower volume, higher warranty costs and adverse balance sheet exchange effects."
There were problems of one kind or another in practically every region. North America experienced higher warranty costs than expected, partially due to recalls. The sales volume for the quarter was 665,000 units, versus 725,000 in Q3 2013, and pre-tax results amounted to $1.41 billion versus $2.296 billion last year.
South America and Europe both posted worse pre-tax results than last year. On the bright side, European volume was up slightly to 321,000 vehicles, from 303,000 in Q3 2013. The Middle East and Africa also lost $15 million, but that was an improvement compared to the $25 million loss previously experienced in this region.