Scout "Showrooms" Using the Tesla Model

[victor.powers56]

So, I've been thinking a lot about this since reading about the existing dealerships lawsuits trying to prevent Scout from doing direct marketing. I'm sure Scout leadership has thought about this but I believe the only way they're going to be able to avoid the lawsuits is to establish "showrooms" in each state they what to do business in sort of like the Tesla model.
Tesla originally encountered huge pushback from national auto dealership associations in states that require all cars to be sold thru a dealership. Tesla got around this by establishing company owned "showrooms" where prospective buyers could go, see models and do test drives. These "showrooms" were counted a "dealerships" that would also assist buyers with buying directly from Tesla. No stock on hand beyond a minimal number of test vehicles and maybe some used from trade-ins.
Basically, this would be Scout "dealerships" that are centrally owned and operated businesses vs. the traditional franchise model. In a traditional dealership a local owner sets up shop at a location, buys stock from the manufacturer then marks it up and resells it to the public. In the direct marketing dealership, the central corporation controls all aspects of product from design and manufacturing through pricing and sales and into owner support. Traditional dealerships basically have a free hand to mark up their product to whatever price they think they can get away with, whereas a centrally owned dealership sells at the manufacturer's cost. Centrally controlled "dealerships" allow the manufacturer to more closely control their products after the sale as well so you don't have local dealers charging outrageous maintenance and repair fees.

The downside of this model is it requires a huge capital outlay by the manufacturer to set up these showrooms. Once it's running it's great - getting started is tough though.

SO, yes, Scout may need to have a form of dealership. But by cutting out the middle-man they keep cost low and and improve owner satisfaction instead of relying on local franchisees. What does Scout leadership think about this model?

 

[Scoutsie]

So, I've been thinking a lot about this since reading about the existing dealerships lawsuits trying to prevent Scout from doing direct marketing. I'm sure Scout leadership has thought about this but I believe the only way they're going to be able to avoid the lawsuits is to establish "showrooms" in each state they what to do business in sort of like the Tesla model.
Tesla originally encountered huge pushback from national auto dealership associations in states that require all cars to be sold thru a dealership. Tesla got around this by establishing company owned "showrooms" where prospective buyers could go, see models and do test drives. These "showrooms" were counted a "dealerships" that would also assist buyers with buying directly from Tesla. No stock on hand beyond a minimal number of test vehicles and maybe some used from trade-ins.
Basically, this would be Scout "dealerships" that are centrally owned and operated businesses vs. the traditional franchise model. In a traditional dealership a local owner sets up shop at a location, buys stock from the manufacturer then marks it up and resells it to the public. In the direct marketing dealership, the central corporation controls all aspects of product from design and manufacturing through pricing and sales and into owner support. Traditional dealerships basically have a free hand to mark up their product to whatever price they think they can get away with, whereas a centrally owned dealership sells at the manufacturer's cost. Centrally controlled "dealerships" allow the manufacturer to more closely control their products after the sale as well so you don't have local dealers charging outrageous maintenance and repair fees.

The downside of this model is it requires a huge capital outlay by the manufacturer to set up these showrooms. Once it's running it's great - getting started is tough though.

SO, yes, Scout may need to have a form of dealership. But by cutting out the middle-man they keep cost low and and improve owner satisfaction instead of relying on local franchisees. What does Scout leadership think about this model?

This would possibly be a slam dunk move except Tesla didn’t begin as the possible IP of another company. That’s one of the problems and one of the arguments being made. The argument is that Scout Motors didn’t spring forth as an independent new company free and clear of any ties to any other existing motor vehicle manufacturer with dealerships in the United States and it’s not clear if Volkswagen AG and Volkswagen Group of America are separate enough from each other for this to be a valid legal argument that Scouts shouldn’t be sold at Volkswagen dealerships. I mean, I certainly hope so. **** a dealership. They don’t deserve to get my money.

 

[J Alynn]

So, I've been thinking a lot about this since reading about the existing dealerships lawsuits trying to prevent Scout from doing direct marketing. I'm sure Scout leadership has thought about this but I believe the only way they're going to be able to avoid the lawsuits is to establish "showrooms" in each state they what to do business in sort of like the Tesla model.
Tesla originally encountered huge pushback from national auto dealership associations in states that require all cars to be sold thru a dealership. Tesla got around this by establishing company owned "showrooms" where prospective buyers could go, see models and do test drives. These "showrooms" were counted a "dealerships" that would also assist buyers with buying directly from Tesla. No stock on hand beyond a minimal number of test vehicles and maybe some used from trade-ins.
Basically, this would be Scout "dealerships" that are centrally owned and operated businesses vs. the traditional franchise model. In a traditional dealership a local owner sets up shop at a location, buys stock from the manufacturer then marks it up and resells it to the public. In the direct marketing dealership, the central corporation controls all aspects of product from design and manufacturing through pricing and sales and into owner support. Traditional dealerships basically have a free hand to mark up their product to whatever price they think they can get away with, whereas a centrally owned dealership sells at the manufacturer's cost. Centrally controlled "dealerships" allow the manufacturer to more closely control their products after the sale as well so you don't have local dealers charging outrageous maintenance and repair fees.

The downside of this model is it requires a huge capital outlay by the manufacturer to set up these showrooms. Once it's running it's great - getting started is tough though.

SO, yes, Scout may need to have a form of dealership. But by cutting out the middle-man they keep cost low and and improve owner satisfaction instead of relying on local franchisees. What does Scout leadership think about this model?

I think these are the easier solutions. The bigger problem that is preventing is that NADA is arguing that VW already has established dealerships and using Scout to circumvent their “right” to sell the vehicles is the argument. Which is ridiculous. VWoA has multiple subsidiary brands so why VW always think they deserve the rights to sell them is comical to me. As I’ve noted before-VW could sell them through Ducati and argue it’s a lifestyle vehicle no different than a super bike dealer. Will be interesting to watch. And as you said-SM must certainly have expected and planned for all this legal nonsense. The big shame is all this overhead legal cost gets passed along to the buyers which makes NADA suck that much more

 

[6-ScoutFamily]

I still don’t see how these laws would stand up to an anti-trust challenge.

 

[cyure]

I just have faith in SM that they already have a plan and have had one since day 1.

 

[Scoutsie]

I still don’t see how these laws would stand up to an anti-trust challenge.

Because corporations are people, too? It hurts a good honest dealer when they are stripped of their right to mark up inventory. You take food off of their solid marble tables, you beast. What are their children to eat, baloney sandwiches instead of abalone sandwiches?*

*thank you, The Simpsons, for this joke

 

[J Alynn]

Because corporations are people, too? It hurts a good honest dealer when they are stripped of their right to mark up inventory. You take food off of their solid marble tables, you beast. What are their children to eat, baloney sandwiches instead of abalone sandwiches?*

*thank you, The Simpsons, for this joke

️

 

[Mousehunter]

Scout is already planning on building centers - with 25 Scout owned rooftops (Scout Studios and Scout Workshops) planned before release. They are planning on opening 57 retail and service sites in 2028, and expanding that to 100 by 2032. I am assuming that in areas that prevent sales, they might still be able to offer test drives and demos. Another option is to use car rental agencies to provide the test drives. My extended family has done that to some extent - but it did not work out well for me the time I tried. Airports probably have EV's, but other rental locations carried very few.

 

[Broverlander]

If Scout has a problem, this won't fix it. Tesla and Scout (to the extent Scout has a problem) have two different problems. I addressed the issue here:

Post in thread 'The Scout Times'

Friday at 10:52 AM

Surely they can loophole this like Tesla does with the Showroom only locations. If you've never experienced one of these locations they're a lot of fun. The people can talk to you about the vehicles, show you the vehicles, you can even test drive vehicles, and then they can show you the website where YOU can go to and place an order for a car if you want one. They can't talk any numbers at all or do any of the website input for you, they cant even hold the tablet for you, but they can walk you through every step of the process to order/buy a car and as long as it's done solely by the...

• Broverlander

• 

 

[Broverlander]

I continue to say this because I truly believe it: the easiest way for Scout to get this to go away is to settle. I don't know what that settlement would entail. Certainly, Scout isn't just going to give up and have VW dealers sell Scouts. Scout is still going to sell direct. So it's going to have to be money. Is it a one time payment? Maybe. Will Scout give the dealers some cut of the profits from each vehicle sold? I don't know.

I really haven't dug into the arguments made by both sides so I can't tell you which has the stronger case. Frankly, I can't, because it's all going to come down to how closely entwined VW is with Scout. Only VW has that information at the moment.

 

[speedrye]

I continue to say this because I truly believe it: the easiest way for Scout to get this to go away is to settle. I don't know what that settlement would entail. Certainly, Scout isn't just going to give up and have VW dealers sell Scouts. Scout is still going to sell direct. So it's going to have to be money. Is it a one time payment? Maybe. Will Scout give the dealers some cut of the profits from each vehicle sold? I don't know.

I really haven't dug into the arguments made by both sides so I can't tell you which has the stronger case. Frankly, I can't, because it's all going to come down to how closely entwined VW is with Scout. Only VW has that information at the moment.

Seems there's an opportunity here. Scout needs service locations ASAP and these dealership groups survive on service money. Make a deal with them to temporarily use existing dealerships for service as the Scout network is built out. In this case, select a more premium experience with Audi instead of VW and only give it to highly-rated dealers.
I bought my MINI (one of the first in the country) through the BMW dealership and it was serviced through the BMW dealership by a MINI employee. Years later, MINI had their own dealership and service department, but service was never a concern for a new sub-brand.

I think that could be part of a settlement in select states without as much cash changing hands. I'm also okay if VW Group wants to punish the dealers behind the scenes since it's costing them money on both sides of these lawsuits.

 

[J Alynn]

I continue to say this because I truly believe it: the easiest way for Scout to get this to go away is to settle. I don't know what that settlement would entail. Certainly, Scout isn't just going to give up and have VW dealers sell Scouts. Scout is still going to sell direct. So it's going to have to be money. Is it a one time payment? Maybe. Will Scout give the dealers some cut of the profits from each vehicle sold? I don't know.

I really haven't dug into the arguments made by both sides so I can't tell you which has the stronger case. Frankly, I can't, because it's all going to come down to how closely entwined VW is with Scout. Only VW has that information at the moment.

But why do they have to settle with VW. Why are they the go to brand under the umbrella. I keep saying-sell them under Ducati, or Lamborghini. I’m sure as the manuf they can set their allocations based on fair sales practice. Our MSRP is ‘X’. If you sell over ‘X’ your allocation gets cut and will be allocated to another dealer who is following the intent of fair pricing. VW dealers don’t sell Audi, or their other sub brands so why do they get this opportunity. Think about where this right to own/produce Scout came from-a commercial trucking acquisition. Why not sell them through that subsidiary and provide them with EV techs since the truck sales already have service bays. Problem solved.

 

[Broverlander]

But why do they have to settle with VW. Why are they the go to brand under the umbrella. I keep saying-sell them under Ducati, or Lamborghini. I’m sure as the manuf they can set their allocations based on fair sales practice. Our MSRP is ‘X’. If you sell over ‘X’ your allocation gets cut and will be allocated to another dealer who is following the intent of fair pricing. VW dealers don’t sell Audi, or their other sub brands so why do they get this opportunity. Think about where this right to own/produce Scout came from-a commercial trucking acquisition. Why not sell them through that subsidiary and provide them with EV techs since the truck sales already have service bays. Problem solved.

You're right. VW dealers don't sell Audi, but Audi dealers do. And that's what the dealers want. These dealers want a Scout franchise so they can sell these Scouts and profit off of them. If Scout were sold through subsidiaries, dealers wouldn't care. They just want a cut of the profit and don't care how they get it.

Scout doesn't have to settle at all. But the decision to settle really comes down to the strength of Scout's defense, something I can't analyze because I don't have the facts. There are very few cases, however, that are air tight. There's always some wart. It's the risk associated with those warts that causes attorneys to encourage their clients to settle.

I honestly don't know if you can do the allocation rules you've alluded to. Many states' franchise laws address that very thing. It's been far too long since I had a franchise case but that sounds vaguely familiar.

 

[R1TVT]

This is all a bunch of whining. Bloviating fools trying to get tentacles into something that is not theirs to get. There is no settlement.

 

[Mousehunter]

If they force them to sell through dealers - they should use International

 

[CSpott]

But why do they have to settle with VW. Why are they the go to brand under the umbrella. I keep saying-sell them under Ducati, or Lamborghini. I’m sure as the manuf they can set their allocations based on fair sales practice. Our MSRP is ‘X’. If you sell over ‘X’ your allocation gets cut and will be allocated to another dealer who is following the intent of fair pricing. VW dealers don’t sell Audi, or their other sub brands so why do they get this opportunity. Think about where this right to own/produce Scout came from-a commercial trucking acquisition. Why not sell them through that subsidiary and provide them with EV techs since the truck sales already have service bays. Problem solved.

Aside from the greed from the dealership owners, the lawsuits tell me that these VW and Audi dealers believe they will lose customers to Scout.

FWIW, I agree with you, VW and Audi don't sell each others new vehicles, so why should they think they deserve to automatically sell Scouts? Sure, some dealers own multiple dealerships for different brands, but, to assume that you should have a piece of the pie, and file a lawsuit because you don't get any pie, is just greed.