Automakers and retailers experimenting with vehicle subscription programs face a big "What if?" State legislatures now have regulation of the programs on their radar screens, and a new state law could torpedo how and even whether subscription plans can be offered. Case in point: Vehicle subscription plans are a no-go in the state of Indiana right now under a moratorium that lasts until May 1, 2019.
No doubt there are some oversight matters that need to be cleared up. For instance, how should registration and license plates for subscription vehicles be handled? Some parties in New Jersey are exploring special plates that would give subscription program operators more flexibility in the vehicles they put into service and help them avoid rental car fees charged in the state.
But perhaps the core issue is the age-old tension around direct sales by automakers. Some of the subscription pilots launched by manufacturers did not have specific roles for the dealerships retailing their vehicles. And some dealers have pushed back. The ambiguity around the role of dealerships in these subscription programs has no doubt led to some of this legislative activity. In California, for instance, dealers lobbied for legislation requiring that automaker subscriptions go through dealers. That effort was put on hold in a compromise between the dealers and manufacturers who now plan to discuss the issue further.
Dealers don't want to miss out on what could be a sizable new revenue stream, one that also might take away from the traditional sales and leases that they do handle. And manufacturers would prefer to experiment with these new mobility services without new statutes or regulations limiting how they do it.
Perhaps the best way to avoid big-picture legislative conflicts over subscription programs going forward? Manufacturers developing these programs should talk extensively to their dealers during the planning process. They should be extremely clear and upfront on the role of dealership and how dealers will be paid for their involvement. After all, there is a painful history of what happens when automakers sidestep their retailers: It usually backfires.
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