Scout's lawsuits regarding direct to consumer Sales

[Latrant]

More and more super dealer groups own multiple franchises across multiple states including multiple dealerships in the same geographic area, such that you think you're cross-shopping Ford and GM but in reality you're just working with the same dealer pricing.

Lithia alone owns something like 450 dealerships in North America and the UK and they use central pricing for all of them.

I agree and this is why the multidealerships owned by large corporations no longer need any protection from franchise laws and are no longer 'the little guy' compared to the manufacturers.

 

[Broverlander]

I guess to me it seems something like this. VW dealers have a franchise to sell VW vehicles imported or manufactured by VWA. They do not have a franchise to sell any other vehicles manufactured by other brands under VWAG. That said, the owners of the VW dealers presumably could try to jump through the hoops and pay the fees and maybe purchase franchises to sell those other brands (may, because who knows the rules of the franchise license - it could include exclusive territories). They are not being given that opportunity with Scout.

So to me, it is less about VW dealers being able to sell Scouts - I don't see them having a leg to stand on. But perhaps the lawsuits can force VWAG to put Scout under VWA to get Scout to use a franchise model and open up pathways to building and buying Scout franchises.

Now a second question - if a lawsuit wins in one state, will it automatically apply to other states? All Scout really needs is one state to allow direct sales - then they should be able to use the existing loophole. Ship all vehicles to the state that allows the sales, and sell them from that state.

If Scout loses one lawsuit in one state is doesn't necessarily apply to other states. There are, of course, some caveats to that. First, there's a class action lawsuit pending somewhere on the East Coast. If Scout lost that one, it would apply nation wide. I find it hard to believe the plaintiffs there will be successful. Second, if Scout loses one of these lawsuits, I know the other plaintiff's counsel will use that against Scout. The other courts wouldn't be bound by it, but they might find it persusaive. So no, it's not a death nail if they lose one but it makes it an uphill battle for the others.

 

[dumbdork]

I'm curious if theres a list of states where they dont give a rip and are like 'yea go for it' and if there's other states that are fighting tooth and nail? Or is this really applicable to all states right now?

 

[chucchinchilla]

I ran this through Gemini to see what the odds were of Scout winning these cases. Yes it's AI boo hoo, but these are some pretty relevant points...

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"estimate odds of scout winning these cases based on understanding of current laws"

Strict "Anti-Affiliate" States (Very Low Odds: ~10%–20%)
In states where dealer lobbies have successfully updated franchise statutes, the plain text of the law heavily favors the dealers.

• The Legal Reality. States like California (via Assembly Bill 473) and Colorado explicitly prohibit automakers from competing against their own franchised dealers "directly or indirectly through an affiliate". Because Volkswagen AG owns 100% of both Volkswagen Group of America and Scout Motors, Scout fits the textbook legal definition of an affiliate.

Permissive or "Gray Area" States (High Odds: ~70%+)
Not every state has modern "anti-affiliate" language written into its motor vehicle code.

• Legacy Franchise Laws. In states where franchise laws were written decades ago to prevent Ford or GM from opening factory-owned Ford or GM stores across the street from franchisees, Scout has a much better chance of arguing that a distinct corporate subsidiary selling a different brand is legally permissible.
• Legislative Carve-Outs. Scout is actively lobbying state legislatures for exemptions—most notably in South Carolina, where lawmakers have weighed carve-outs to reward Scout for building its $2 billion factory in the state.

The Most Likely Outcome: A Settlement or Hybrid Model
Because Scout does not begin series production until 2027–2028, Volkswagen and Scout are using litigation to buy time while building leverage. Rather than risking an all-or-nothing loss in states like California, Washington, and Florida, legal analysts generally expect Volkswagen to eventually negotiate a hybrid settlement. Under a compromise, Scout could retain direct online pricing and ordering—similar to how Honda and Sony structured their Afeela EV joint venture or how Ford handles certain EV sales—while paying existing VW dealers a delivery, prep, or service fee for every vehicle sold in their territory.
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Now my position: I would prefer direct-from-manufacturer but a 3rd party dealer isn't the end of the world either because it all comes down to how the manufacturer manages their dealer network. Lexus has proven you can have nice facilities and excellent customer service from pre to post sale support. Even our new Toyota experience last month in San Francisco was excellent overall. If Scout is forced to go 3rd party they can do it successfully with a very tight leash and 100% online ordering.

 

[J Alynn]

I ran this through Gemini to see what the odds were of Scout winning these cases. Yes it's AI boo hoo, but these are some pretty relevant points...

---
"estimate odds of scout winning these cases based on understanding of current laws"

Strict "Anti-Affiliate" States (Very Low Odds: ~10%–20%)
In states where dealer lobbies have successfully updated franchise statutes, the plain text of the law heavily favors the dealers.

• The Legal Reality. States like California (via Assembly Bill 473) and Colorado explicitly prohibit automakers from competing against their own franchised dealers "directly or indirectly through an affiliate". Because Volkswagen AG owns 100% of both Volkswagen Group of America and Scout Motors, Scout fits the textbook legal definition of an affiliate.

Permissive or "Gray Area" States (High Odds: ~70%+)
Not every state has modern "anti-affiliate" language written into its motor vehicle code.

• Legacy Franchise Laws. In states where franchise laws were written decades ago to prevent Ford or GM from opening factory-owned Ford or GM stores across the street from franchisees, Scout has a much better chance of arguing that a distinct corporate subsidiary selling a different brand is legally permissible.
• Legislative Carve-Outs. Scout is actively lobbying state legislatures for exemptions—most notably in South Carolina, where lawmakers have weighed carve-outs to reward Scout for building its $2 billion factory in the state.

The Most Likely Outcome: A Settlement or Hybrid Model
Because Scout does not begin series production until 2027–2028, Volkswagen and Scout are using litigation to buy time while building leverage. Rather than risking an all-or-nothing loss in states like California, Washington, and Florida, legal analysts generally expect Volkswagen to eventually negotiate a hybrid settlement. Under a compromise, Scout could retain direct online pricing and ordering—similar to how Honda and Sony structured their Afeela EV joint venture or how Ford handles certain EV sales—while paying existing VW dealers a delivery, prep, or service fee for every vehicle sold in their territory.
---

Now my position: I would prefer direct-from-manufacturer but a 3rd party dealer isn't the end of the world either because it all comes down to how the manufacturer manages their dealer network. Lexus has proven you can have nice facilities and excellent customer service from pre to post sale support. Even our new Toyota experience last month in San Francisco was excellent overall. If Scout is forced to go 3rd party they can do it successfully with a very tight leash and 100% online ordering.

But how do you prevent them from dealer mark ups or last minute hostage holding if you don’t pay more

 

[chucchinchilla]

But how do you prevent them from dealer mark ups or last minute hostage holding if you don’t pay more

If Scout loses this case, and I hope they don't, that'll be for them to figure out...or for me to fly to a more friendly state to take delivery.

 

[6-ScoutFamily]

More and more super dealer groups own multiple franchises across multiple states including multiple dealerships in the same geographic area, such that you think you're cross-shopping Ford and GM but in reality you're just working with the same dealer pricing.

Lithia alone owns something like 450 dealerships in North America and the UK and they use central pricing for all of them.

Yes, this just makes me want to barf.

We had what I thought was a wonderful central missouri dealership with multiple lines. I was completely comfortable buying my two current used Toyotas from them and having them do the servicing. A mega dealer group out of California purchased them a few years ago and the vibe is just not the same. Same people at the service counter, just a different (less owner friendly) vibe. This is a management problem and i kept wondering what happened until I learned the truth. The outside auto group didn’t use their name for the first two years or so.

I asked one of the sales people when the outside group made the purchase, and they told me a time frame that lined up with the beginning of my doubts. One of the dealership’s lines is VW. This makes me cringe considering what is going on. I sure won’t buy a Scout from this dealer group.

 

[dumbdork]

If Scout loses this case, and I hope they don't, that'll be for them to figure out...or for me to fly to a more friendly state to take delivery.

That was my first thought. I'd happily fly an hour or three to another state and roadtrip home instead of paying a dealer $10k markup. That buys me a lot of Starbucks, in n out and holiday inn rooms.

 

[Jasco]

That was my first thought. I'd happily fly an hour or three to another state and roadtrip home instead of paying a dealer $10k markup. That buys me a lot of Starbucks, in n out and holiday inn rooms.

Holiday Inns? You should sleep in the Scout on remote forest roads on the way home! I'm with you on the In & Outs though.

 

[cyure]

Yes, this just makes me want to barf.

We had what I thought was a wonderful central missouri dealership with multiple lines. I was completely comfortable buying my two current used Toyotas from them and having them do the servicing. A mega dealer group out of California purchased them a few years ago and the vibe is just not the same. Same people at the service counter, just a different (less owner friendly) vibe. This is a management problem and i kept wondering what happened until I learned the truth. The outside auto group didn’t use their name for the first two years or so.

I asked one of the sales people when the outside group made the purchase, and they told me a time frame that lined up with the beginning of my doubts. One of the dealership’s lines is VW. This makes me cringe considering what is going on. I sure won’t buy a Scout from this dealer group.

Our VW dealer in town was fined by the state for their business practices. I certainly don’t want to buy from them.

 

[J Alynn]

Ive walked away three times from our local VW/Audi dealer. Bought my Audi TT from a dealership 45 minutes away and with the recent beetle fun car we drove 90 minutes-granted it was a unique one and used so not much choice on that but will say not my favorite experience. My Audi experience was top notch but our local German group just sucks. I won’t even consider them for service on the beetle since we have a long standing local shop that focuses on used German vehicles and they’ve been great to deal with.

 

[dumbdork]

Holiday Inns? You should sleep in the Scout on remote forest roads on the way home! I'm with you on the In & Outs though.

that was my first thought actually. then I realized the amount of crap I'd need to take onto the plane in order to sleep remotely decently in the bed of a truck. I'm good. I'll take it outdoors on its 2nd outing