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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.

Weekly Recap: BMW rolls out ambitious plug-in hybrid electric plan

"We believe that for the United States, this is going to be very important." – Julian Arguelles Let there be no doubt, BMW is serious about electric vehicles. The German automaker said this week it will make plug-in hybrid versions of all of its core models, an aggressive move that demonstrates its commitment to electric propulsion systems. BMW did not specify which vehicles will get the plug-in systems or provide a timeline for when they will arrive. But the announcement is clearly more than blustering, and the company revealed a 3 Series plug-in prototype this week at an event in France. BMW said the 3 Series uses a version of its 2.0-liter turbocharged four-cylinder engine (240 horsepower, 300 pound feet of torque) with an electric motor sandwiched between the engine and transmission in place of the torque converter. It has an all-electric range of 22 miles. A plug-in X5 with the same powertrain was also displayed alongside the 3 Series, though the X5 has been on the auto-show circuit for more than a year, including a recent stop in Los Angeles. Those two vehicles use "eDrive," and BMW's plans represent the first widespread transfer of its technology from development of the i3 and i8 models to more mainstream products. BMW said it's developing electric powertrains so they can be deployed rapidly across its range, and they are flexible enough to be used with fuel cells in future products. Enticingly, BMW is also working on a "Power eDrive" system, which debuted in a 5 Series GT concept at the event in France. This setup has two electric motors powered by a 20-kilowatt-hour battery pack, and when teamed with a four-cylinder turbo, pump out about 670 hp. Reinforcing BMW's commitment, the company will add more than 200 jobs at its factory in Dingolfing, Germany, to support electric-vehicle development. The moves come as BMW and other automakers diversify their portfolios while fuel economy and emissions regulations are getting tighter around the world. The United States has set a 54.5-mpg CAFE requirement for the 2025 model year. BMW said the electric vehicles were developed with an eye toward the US market, its government policies and its wide-ranging commuting styles. "We believe that for the United States, this is going to be very important," spokesman Julian Arguelles said. Ben Scott, a senior analyst in London with automotive research firm IHS, said BMW's moves are expensive – but necessary – to keep pace with the market.

Mini fini: The Mini Clubman passes into British motoring history

Au revoir, Clubman. The veddy British Mini model that found a loyal following in the UK and elsewhere for more than a half-century has folded its spilt rear “barn doors” for the final time. The ultimate Clubman — assuming there wonÂ’t be another sequel, and Mini says there won't — rolled off the production line Monday at Mini Plant Oxford in England. The Mini “estate” version bows out after 17 years of build at Oxford and more than a half-million units churned out for deliveries to more than 50 countries. The heritage of the Clubman — and of most Minis — is worth recalling because the brand has spawned such affection among its fans. One has to deep-dive back to the early Sixties, when MiniÂ’s owner, British Motor Corporation (BMC), introduced two estate versions of the original Mini: the Austin Seven Countryman and Morris Mini Traveller. In 1967, the characteristics of existing Mini wagons were combined to form the first Clubman. lt was axed in 1982 — after it was once renamed as the 1000HL — and the Clubman wouldn't return until 2007, with the brand then under the auspices of BMW. Modern vehicle safety standards presented a challenge for those rear doors. “We needed to ensure that both doors would always open fully without obscuring the rear lights, which was a legal requirement,” said Guy Elliott, who was part of the development team for the doors at the time. The reborn Clubman was updated in 2015 for a second generation. It adopted Mini's signature circular daytime running lights, a feature still seen today, and ditched the unusual rear doors for a more conventional setup. Last year Mini launched the “Final Edition” of the car, with a special grille and alloys and limited it to a run of 1,969 units, paying homage to the launch year of the original. The BMW Group says it expects to invest about $750 million in the next few years in realigning the Oxford plant to accommodate assembly space for the upcoming electric Aceman crossover and new Cooper variations later this year.