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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.

Ford rethinking vehicle launch strategy

With a new boss at the helm, Ford is looking at new ways to improve its vehicle launches in North America to prevent recent issues that have popped up with models like the Lincoln MKZ, Ford Escape and Ford Fusion. Speaking with Automotive News, Ford's new president of the Americas, Joe Hinrichs, revealed a few ways the automaker plans to avoid early build issues such as the engine fires on certain 2013 Escape and Fusion models and months-long delays for customers to receive their MKZs.
It sounds like the root of the problems may have been Ford's relationship with suppliers compounded by the fact that the product surge came on the heels of the recent industry-crippling recession, and in the AN article, Hinrichs says improvements are being made to reduce problems during the launch of new or redesigned models. Three such improvements that were implemented during the first quarter of this year including more rigorous quality comparisons, better use of computer technology to catch major problems sooner and hiring engineers to work closer with suppliers.

Five vehicles named Top Safety Pick+ including new Civic, MKZ

In an attempt to help push vehicle safety to a higher level, the Insurance Institute for Highway Safety created a stricter Top Safety Pick+ rating last year, which incorporates a brutal small overlap test and requires cars to get Good ratings in four out of the five categories (and no less than Acceptable in the fifth). Joining the list of the safest cars of 2013, the 2013 Volvo XC60, Lincoln MKZ, Honda Civic (sedan and coupe) and the 2014 Mazda6 have all received the coveted TSP+ rating.
The Mazda6 and Lincoln MKZ have both been completely redesigned, and both received Acceptable ratings in the small overlap test. The Honda Civic, coming off its emergency refresh for 2013, is the first small car to be subjected to the small overlap test, and IIHS says that one of the car's many upgrades includes a stiffer front structure allowing it to receive Good ratings in all categories. Similarly, the XC60 gets all Good ratings thanks to, according to IIHS, Volvo updating the airbag software allowing the side airbags to inflate during the small overlap test.
The 2014 Subaru Forester has not yet been subjected to the small overlap test, so it must make do with just a Top Safety Pick rating until the IIHS tests small utility vehicles, which is expected to happen later in the spring.