Article: How Scout Motors Became An Existential Threat To Car Dealers

[MadGreek]

Article: How Scout Became An Existential Threat To Car Dealers

https://www.theautopian.com/how-scout-became-an-existential-threat-to-car-dealers/

David went to the big Scout reveal way back in 2024, and this slide from a presentation amuses me for many reasons, but let me have David explain it:

Scout said that, when it comes to launching a new brand and network, you need full engagement and enthusiasm. Apparently, there’s not enough of that going around, because — per this slide below — 81 percent of dealers don’t have EVs for sale and 50 percent of those said “they wouldn’t sell EVs regardless of inventory availability.”
[…]
The next point Scout made was that dealerships have broken consumers’ trust. “Only 8 percent of consumers say they have high or very high trust in car dealers,” Thacker said, pointing to tens of thousands of FTC complaints.

Yeah, so, the funny thing about this is that Scout Motors is wholly owned by Volkswagen Group. And Volkswagen Group has a lot of dealers. I think I overuse this, but:

The difference? Volkswagen claims that Scout Motors is an entirely independent organization, run by an entirely independent CEO, Scott Keogh. If you forgot, Keogh was previously the CEO of Volkswagen of America. [Ed note: Pretty much everyone at the press event had a thick German accent. Scout feels to me like VW trying to rebrand what has been a rather pathetic decade in the U.S. -DT].

Normally, this wouldn’t matter, but this independence is kind of the whole argument VW is using for why it doesn’t have to abide by all the franchise agreements it’s made with its dealers. Dealers who were given a bunch of electric cars by Volkswagen Group to try to sell. Electric cars that have mostly failed to find an audience. I don’t know that the Scout duo of a truck and SUV that can be had as an EREV or pure EV is going to be a winner, either, but if any automaker can create a new brand and call it “independent,” the whole concept of a franchise agreement goes out the window.

A Colorado board recently approved Scout’s license to sell cars over the objection of dealers, and now those dealers are suing. As Automotive News points out, the principle here is important if you’re a dealer:

“Scout is so closely tied with Porsche, VWoA, and AoA, that it is their alter-ego, through Volkswagen AG’s control of each entity,” the lawsuit said. “The Department, in making its licensing determination, should have determined that Scout, Porsche, VWoA, and AoA were the same entity for purposes of determining whether Scout has no franchised dealers of the same line-make in Colorado.”
Scout’s dealer license will adversely impact Porsche, VW and Audi franchised dealerships in Colorado, the lawsuit alleges.
“If this type of arrangement is valid under Colorado law, there is no mechanism to prevent other manufactures such as General Motors or Ford from setting up alter-ego companies to sell directly to consumers and compete with their franchised dealers,” the lawsuit said.

If the dealers are successful, then this could present an existential challenge for Scout, which clearly doesn’t want dealers. If Scout is successful, the inverse is true. Either way, dealer groups aren’t going down without a fight.

 

[4sallypat]

Only affecting the EREV Scout models, following this lawsuit in CO against the state, I'd say that VW being connected to Scout is an issue.

Why Scout can't be like Tesla, I don't understand.

https://insideevs.com/news/785203/scout-colorado-dealers-lawsuit-erev/

 

[PMurphy]

Hard to tell which way the courts will rule state by state. The attitude of dealers toward EV’s is changing for the better slowly but FEW have built respectable EV service departments. I personally won’t be controlled by a court decision on this issue.

IF a dealer is needed locally and offers decent service and a purchase experience without all of the games (mark ups, magic spray on juices etc) I will give them my business. If they chose to continue the current model AND I can arrange direct delivery I will do what it takes to preserve my freedom to choose.

As a last resort (and discussed in an adjoining thread) there is always the used EV market to shop!!

 

[astricklin]

Should a VW dealer be allowed to force Volkswagen Group to allow them to sell Porsche or Audi vehicles?