California New Car Dealers Association sues Scout and VW Group over direct sales (April 22, 2025)

[Scout Fan]

Just reported today by Auto News:

April 22, 2025

The lawsuit says Scout’s direct-to-consumer model violates a California law that was amended and took effect Jan. 1, 2024. The dealer association considers Scout, wholly owned by Volkswagen AG, to be an affiliate brand of VW. The amended law requires affiliated brands to use franchises to sell and service vehicles, the lawsuit says.

“Thus, Scout Motors could sell its vehicles in California as long as it used new or existing VW-affiliated franchisees to sell those vehicles,” it says.

VW dealers in California are “deprived of the opportunity to sell highly desirable Scout Motors vehicles,” the lawsuit says.

“Volkswagen can’t pick and choose which vehicles to sell on its own or through its franchised dealer network, reserving the most profitable or desirable vehicles for itself,” California New Car Dealers Association President Brian Maas said in an April 22 statement. “Illegal competition will harm not only dealers but also the communities and car buyers that they serve.”

 

[Latrant]

dealers always harm car buyers, if they can get away with it.

 

[ScoobyDrew]

Colorado is trying to pass a law similar to the "affiliate" rule too. Scout sent a message to Colorado reservation holders earlier this year. Per Scout's email:

"a new bill introduced this year, SB25-160, would repeal key elements of the 2020 bipartisan legislation and distort and weaponize the law against the direct-to-consumer model. At the behest of car dealer lobbyists, this bill makes it illegal for some EV manufacturers to sell directly to consumers, thereby forcing you to go through a franchised dealer middleman. Additionally, the bill penalizes consumers by making it illegal for some EV manufacturers to even service vehicles within the state."

When I bought a Bronco, I had to go out of state because no Colorado dealer that I found would even tell me what they would charge me for the privilge of purchasing a Bronco from them.

So if any VW dealer tries to add more than $.01 to the price of this thing, I'll definitely move on to other pastures.

 

[Latrant]

Colorado is trying to pass a law similar to the "affiliate" rule too. Scout sent a message to Colorado reservation holders earlier this year. Per Scout's email:

"a new bill introduced this year, SB25-160, would repeal key elements of the 2020 bipartisan legislation and distort and weaponize the law against the direct-to-consumer model. At the behest of car dealer lobbyists, this bill makes it illegal for some EV manufacturers to sell directly to consumers, thereby forcing you to go through a franchised dealer middleman. Additionally, the bill penalizes consumers by making it illegal for some EV manufacturers to even service vehicles within the state."

When I bought a Bronco, I had to go out of state because no Colorado dealer that I found would even tell me what they would charge me for the privilge of purchasing a Bronco from them.

So if any VW dealer tries to add more than $.01 to the price of this thing, I'll definitely move on to other pastures.

I’m surprised by Colorado that always feels like it’s an EV friendly State. However, the Legislature may be influenced by the Dealership owners who contribute to their cause.

 

[ScoobyDrew]

I’m surprised by Colorado that always feels like it’s an EV friendly State. However, the Legislature may be influenced by the Dealership owners who contribute to their cause.

A few weeks ago, I did a very quick, but not thorough look, at it. The statute as currently in place allows EV manufacturer to sell direct as long as they currently have no dealers for that line (Tesla comes to mind).

The change makes it so that any manufacturer (Scout comes to mind) cannot complete in sales or service if the manufacturer (Scout) or any "Affiliate" (think VW) has ever had dealers or service facilities. This looks targeted specifically by the dealers towards the Scout/VW situation but goes way beyond it. I guess it could reel in Rivian too?

IIt definitely appears that the dealer lobby has been in full swing. Like you, I'm surprised by this as every 3rd car here in CO is a Tesla or other EV. I even see probably 10 cybertrucks daily (but I've still only seen two Fisker Oceans).

If this causes the vehicle to cost me $.01 more thru a dealer than direct, I'll be cancelling. The automotive world has too many choices to feel trapped by these dealer shennanigans.

 

[joewilk45]

Keep in mind they only need one state to allow scout to sell DTC let's Say Delaware tax friendly state they manufacture in SC run all paperwork and titles through Delaware you can still go to SC get your delivery experience. And have So call distribution centers / Carvana model through out country and all paperwork is run through one state your paperwork is delivered to you beforehand and you pick your ride up at nearby distribution centers IE; Scout lounge . F .. VW dealers and take care of the client that's what makes a car brand great again

 

[ScoobyDrew]

Keep in mind they only need one state to allow scout to sell DTC let's Say Delaware tax friendly state they manufacture in SC run all paperwork and titles through Delaware you can still go to SC get your delivery experience. And have So call distribution centers / Carvana model through out country and all paperwork is run through one state your paperwork is delivered to you beforehand and you pick your ride up at nearby distribution centers IE; Scout lounge . F .. VW dealers and take care of the client that's what makes a car brand great again

The new statute also appears to make it illegal for manufacturers provide warranty service, making it so that I'd have to go out of state to get service.

The dealers are going full in on this.

A few weeks ago Scout had a vehicle viewing by the capitol building in protest. I couldn't get there that day and am bummed I couldn't.

 

[joewilk45]

Look we own scout we see the hurdles in front of us. Our lawyers play pickleball with their lawyers. We manufacture in SC who gave us a billion dollars in tax payer money they want us to succeed. We manufacture in SC for those who want to accept delivery or travel to the experience center they can. All finance titles and registration throw a tax friendly state. All paperwork would be in hand before delivery. Now get this we lease warehouses through out country and subdivide warehouse and rent to a Slash EV / Scout service center. Which are independent of manufacturer.