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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.

2015 BMW X4

BMW has been in the line-blurring business of late, with the original X5 "Sports Activity Vehicle" muddling the line between SUVs and sport sedans in 1999, the 5 Series Gran Turismo challenging what our definition of "Gran Turismo" means in 2009, and pretty, low-roofed four-doors like the 6 Series Gran Coupe and the fresh new 4 Series Gran Coupe broadening the meaning of the word "coupe."
In the midst of all of this, BMW blurred the lines around both the SUV and coupe genres with its big, heavy, and in many ways ridiculous X5-based "Sports Activity Coupe" (cue collective eye-roll), dubbed X6. Auto wags scoffed at its lack of utility, compromised outward visibility and added cost, but a more emotional public was apparently smitten enough by its aggressive looks to avail itself of some 250,000 of them worldwide in six model years on sale.
Enter the all-new 2015 X4 crossover - err, "Sports Activity Coupe" - which BMW hopes will perform as well in the compact category as the X6 has on the next rung up the ladder. Like the X6, the X4 is a tough sell on paper: it's more expensive and less practical than the X3 on which it's based; it's heavier, despite the loss of interior space; and it doesn't even hold as much stuff in the back as the 3 Series wagon. As with the X6, the X4 is essentially a high-riding style statement that, like proper coupes (the two-door kind), says to the world, "You fools can take your need for practicality and shove it. I just want to look good."

BMW 1 Series dead for 2014

BMW is temporarily abandoning the increasingly competitive and popular compact luxury segment, as it's announced that its 1 Series Coupe and Convertible will be discontinued for the 2014 model year, marking an ignominious end to a line that spawned a pair of excellent high-performance models during its life. Production on the Coupe officially ended in August, while convertible production was taken offline in June.
And while we're mourning the loss of the 1 Series, we're left wondering about the status of its replacement, the 2 Series. That car, which we've already seen inside and out and know the specs on, is expected to make its debut at the 2014 North American International Auto Show in Detroit, although it's unclear just how quickly BMW will get it to showrooms. Assuming BMW doesn't have a bumper crop of already-built 2013 models to hold them over, that leaves Munich-based manufacturer somewhat vulnerable, particularly as Audi and Mercedes-Benz are both launching new models in the compact-premium space vacated by the 1 Series. Any delay in the arrival of the 2 Series could be bad news for BMW, especially if the public is receptive to the new Audi A3 and CLA-Class (early signs suggest that the baby Benz has traction).
In addition, BMW has made a number of changes across the rest of its lineup which are listed below in the official press release. Some of the notable changes, though, include a revised 445-horsepower twin-turbocharged V8 on the 5 Series, a limited-edition Frozen Brilliant White Edition for the 6 Series and the rollout of a new, touchpad-equipped version of iDrive on a number of BMW models. Scroll down for the full press release from BMW.