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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.

Daimler exec hypothetically discusses 3-cylinder engines for small hybrids

Is three the magic number of cylinders for Mercedes-Benz parent Daimler and its efforts to build smaller powertrains for its compact hybrids? Potentially, yes, the German automaker could see the need for three-cylinder mills, Automotive News reports. The company doesn't have any plans for them as of yet, though. Daimler executive Bernhard Heil talked with Automotive News about the challenges of using four-cylinder engines in a front-wheel-drive setup and said that three-cylinder engines could work in transverse-mounted powertrains for hybrid cars. For now, though, the company doesn't actually have any plans to go in that direction, Mercedes-Benz spokesman Christoph Horn said in an e-mail to AutoblogGreen. Horn wrote that Heil "actually said that if ever MB would use a three-cylinder engine than [it would be] in a configuration where space is restricted, such as when using a hybrid power train in a compact car." Of course, the only compact "hybrid" that Mercedes-Benz has is the 2015 C-Class, but that refers to the "hybrid" body is made of 48-percent aluminum, up from the current nine percent, as well as steel. It has nothing to do with the powertrain. Beyond that, there's always the Mercedes-Benz S500 Plug-in Hybrid that the company unveiled at the Frankfurt Motor Show last fall, but that model, which will debut in Europe later this year and arrive stateside next year, has a 3.0-liter turbocharged V6 and an 80-kilowatt electric motor that propels the plug-in from 0 to 62 miles per hour in 5.5 seconds. Not exactly three-cylinder territory, that.

Daimler and Volvo could jointly develop internal combustion engines

BERLIN — Luxury German carmaker Daimler and Volvo, owned by China's Geely, are considering cooperating to cut the costs of developing combustion engines, a magazine reported on Sunday, citing unnamed company sources. The Automobilwoche weekly cited a Volvo manager as saying there were initial talks with Daimler, but no concrete plans, while a company spokesman said it was too early to talk about firm projects, although it was not excluding anybody. A Daimler spokesman said the company's cooperation with Geely, which owns a 10% stake in the German carmaker, was developing in a positive way, but declined to comment further. Global tariffs, accelerated by a trade war between China and the United States, as well as higher investment requirements for electric and autonomous vehicles, are forcing carmakers to seek new ways to cut and share costs. In October, Volvo said it would merge its engine development and manufacturing assets with those of Geely, creating a division to supply in-house brands and also potentially others with next-generation combustion and hybrid engines. Automobilwoche said this new division would start operating by the end of March, which could be a possible starting point for cooperation with Daimler, while a further step could be a partnership to develop electric power trains. Geely and Daimler have said they plan to build the next generation of Smart electric cars in China through a joint venture and the two companies are also cooperating on a premium ride-hailing service in China. Geely bought Volvo Cars in 2010 from Ford, allowing the Swedish brand to operate on an arms-length basis. But in recent years, it has deepened cooperation between the two brands. Volvo already supplies engines to some Geely-branded vehicles, sharing technology through Geely's Lynk brand. Both companies share and develop common vehicle platforms. Related Video: This content is hosted by a third party. To view it, please update your privacy preferences. Manage Settings.