Tensions have been brewing for months between Scout Motors and mainline VW and Audi dealers.
Back in October, the National Automobile Dealers Association called foul against Scout Motors, Volkswagen Group’s latest and broadly autonomous brand entity, over the latter’s decision to sell its upcoming vehicles directly to consumers. Then in December, the company’s general counsel fired back at the California New Car Dealers Association for taking similar actions, saying “Scout Motors will vigorously defend against [legal action].” The company now has to do just that, as a group of Florida Volkswagen and Audi dealerships filed suit against Scout Motors over its reservation system and intent to sell directly to consumers, saying it violates state law.
According to an Automotive News report, Scout Motors’ plan goes against a 2023 Florida law, staying that Volkswagen Group’s ownership stake of more than 30% in Scout makes it a “common entity” of the larger automaker, which has a franchise presence in the state. As such, the plantiffs argue Scout’s $100 refundable reservation system counts as a deposit toward a full sale that bypasses VW’s conventional dealer network, and is illegal. “In Florida, taking a deposit is defined as conducting a sale”, said John Forehand to AN, an attorney representing the group of dealers.
For their part, Scout Motors and Volkswagen Group both maintain the former’s independent structure, where it is within its right to establish its own retail sales apparatus independent from VW Group’s closer subsidiaries like the Volkswagen brand and Audi. Scout Motors CEO Scott Keogh, at the Traveler SUV and Terra pickup trucks’ reveal in Nashville last year, noted “you’ll be able to buy your new car digitally in 10 minutes” through its online system. Beyond the company’s production plant in Blythewood, South Carolina, Keogh also said Scout plans to have about three dozen brick-and-mortar retail centers when it gets rolling in 2027. Eventually, that number would expand to over 100.
Despite the challenges, Scout is still intent to follow the same model as Tesla, Rivian and Lucid in keeping its direct sales model, arguing it’s the way forward for tighter control over the customer experience, from reservations to deliveries and after-sales servicing. For months, though, dealer groups nationwide have said they are not just going to “roll over”, and plan to challenge Scout Motors’ ability to go this route pretty much everywhere it can. It just so happens the legal action is officially starting in Florida.
We’ll have to see how this plays out through the court system in the coming months, of course. Two elements are particularly worth keeping an eye on: Whether dealer groups do indeed make any headway with their arguments (and what knock-on effect that may have for other direct sales efforts going forward), and whether Scout Motor’s impending court battles over that sales model will delay the first deliveries beyond any other snafus between now and 2027.
This article is also posted on TFLcar.com.
