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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.

Automakers tussle over owners of 'orphan' makes

When General Motors put down several of its brands in recent years, it also let loose thousands of brand-loyal customers who will eventually need another car.
R.L. Polk Associates estimates there are more than 18 million cars from 16 discontinued makes on the road today. Those "orphan owners" have sales-hungry competitors seeing dollar signs. GM is offering Saturn owners $1,000 cash toward a Chevy Cruze, Cadillac CTS or a GMC Acadia. Ford is giving its Mercury lease customers a chance to get out of their contracts with no early-termination penalty and offering to waive six remaining payments if they drive off in a Ford or Lincoln.
Edmunds.com research shows the efforts are paying off somewhat for GM, with 39 percent of Pontiac owners, 37 percent of Hummer owners and 31 percent of Saturn owners taking delivery of another GM-branded vehicle. But that leaves as much as 69 percent of owners going elsewhere. Ford, Honda and Toyota seem to be attracting many former GM owners.

2019 Lincoln MKC crossover dials up the luxury perks

Lincoln is taking the wraps off its 2019 MKC, which hits showrooms next summer, revealing a substantially refreshed, more stylish compact luxury crossover that adds new driver-assistance and connectivity technologies and a host of premium ownership perks and options. They include new Black Label personalized trim themes and the ability to pick an exclusive dinner from a curated list of chef-driven restaurants. As we previously forecast, the MKC gets the new Continental-style grille, plus new LED headlamps and a neat touch in a Lincoln welcome mat illuminated on the ground from underneath both front doors to welcome driver and passenger. It also adds new driver-assist features including a pre-collision assist warning and braking system that can detect pedestrians, plus available options like lane-keeping alerts, parallel-parking assistance and a blind spot information system. Owners can also opt for the Lincoln Black Label treatment, which includes premium trim upgrades but also a roster of membership perks: annual vehicle detailing, anytime carwashes and access to a curated list of restaurants where feted chefs will prepare a special dining experience. There are three Black Label themes, each inspired by the arts, travel, fine food and culture: Modern Heritage, defined by a clean, modern aesthetic and Vianca White Venetian leather Indulgence, which lives up to its billing with surfaces trimmed in Venetian leather and Alcantara and accents from Ziricote wood And Center Stage, inspired by the world of theater, featuring a diamond-L perforation pattern on the Alcantara cloth inserts finished with precisely stitched Foxfire Red piping, exotic wood accents and Jet Black Venetian leather with Firefox Red accents. In addition, the Reserve trim features a Rialto Green cabin with black ash wood accents, which Lincoln says reflects a current theme popular in high fashion. Other options include a panoramic roof and heated and cooled seats. As part of what the Ford sub-brand calls the "effortless ownership experience," the MKC will come with standard pickup and delivery service to and from dealerships for service visits, plus the use of a loaner Lincoln while the car is being worked on. Lincoln says it's the only luxury brand that offers such a service standard.