- VW has gone beyond the usual selling points by selling the upcoming Scout electric truck
- Retail interests in California say this violates franchise laws
- Existing car manufacturers sell cars either as a franchise or a specific model, but not both
California has some of the most EV-friendly policies of any state, but that welcoming attitude isn't shared by the state's commercial dealers.
A group of those dealers has threatened to take legal action against Volkswagen Group's new Scout Motors EV brand, if it doesn't stop booking its electric Terra pickup truck and Traveler SUV due in 2027.
Scout said he would rely on it direct sales model-same as other brands of electronics such as Tesla, Rivian, and Lucid.
In a Dec. 20 letter to Scout Motors general counsel Neil Sitron and VW Group of America general counsel Antony Klapper, first seen by Automotive News, the California New Car Dealers Association said the car sales program is “unfair. provides an opportunity for new and existing VW dealers” and allegedly violates California franchise laws.
Scout Traveler concept
“California law states that manufacturers may not compete with their business owners by using affiliates to directly sell or service vehicles, which is exactly what VW and Scout intend to do,” the letter said.
Dealers have been complaining about direct sales ever since Tesla rolled out its sales infrastructure a decade ago. At the time, Tesla said it didn't sound like his electric cars would stand a chance it is sold in franchises near petrol cars. Retailers responded with lobbying campaigns at the federal level to protect franchise laws, something Rivian CEO RJ Scaringe called “as close to corruption as you can get.”
But while automakers like Tesla, Rivian, and Lucid all rely in part on company showrooms, they have never used franchised dealers. On the other hand, Scout is still part of the VW Group, so the argument seems to be VW can have dealerships or direct sales, but it can't have both-even if the different sales models were silenced by the brand.
Scout Terra concept
Volvo has found the right balance with Polestar, which has been approved by the states as a direct sales model, but with some level of customer service—and the service and repair operations themselves, in many cases—linked to Volvo dealerships.
Such an approach may help reduce the anger here. US dealers have been asking VW for pickups for years, and VW hasn't kept the dice on the docket at all when it comes to the Scout model. It was a surprise.
Meanwhile, VW recently took a $5.8 billion investment in Rivian, which already happens to make trucks that closely follow the same format as the Scout that was previewed as a concept earlier this fall, more than two years away from production. And, in Rivian's case, its network of corporate showrooms already exists.