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.
Scout's lawsuits regarding direct to consumer Sales
- Thread starter Broverlander
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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.
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.
Not every state has modern "anti-affiliate" language written into its motor vehicle code.
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.
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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.
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.
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.
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.
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.
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.
Our VW dealer in town was fined by the state for their business practices. I certainly don’t want to buy from them.
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.
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
You don't have to be embarrassed for using AI to analyze a legal question! Heck, I do it all the time. Sometimes it's right, sometimes not. In my experience, with legal issues it misses nuance. For example, I don't know that I agree with its determination of the anti-affiliate states. It doesn't assess the definition of "affiliate." That's probably defined by each state. But if we assume Scout would be an affiliate of VW (probably a safe bet), there is still a second hurdle to prohibit Scout from using DTC: they have to be competing against their own franchised dealers. I personally don't believe just selling vehicles is competing. I'd argue you have to be poaching the same market segment. I think Scout would have a very good argument that they aren't poaching VW customers.
I do, however, agree with its assessment that the most-likely outcome is settlement. I wrote that in a prior post. I don't, however, believe it'll be a hybrid settlement where the VW dealers will be involved with sales or service. I previously threw out the idea of a potential settlement where the VW dealers would get a small cut (spiff) with each vehicle sold and AI seems to echo that. I just don't see sales and service. Scout's going to have its own service centers. Heck, they just bought a big place outside of Chicago. That doesn't seem like the actions of the company that might be willing to hand over service to dealers.
Would love to see ballot initiatives to let the buyers decide what they want.
I'm curious if Scout building an Audi-variant throws a wrinkle into the mix. I noticed Audi wasn't participating in the class action in the Eastern District of VA.
Long read but interesting background information.
Not to hijack this thread as i find it verify interesting but this "Scout building an Audi-variant" makes me feel like all the SM marketing is just a hijack of a name and reputation they bought. If these trucks are going to just be "insert name here" what's with all the heritage hype. It feels very disingenuous.
Just to clarify, there is nothing official on this. We've said in the past Scout Motors would be open to contract manufacturing. It is the Scout Production Center and Scouts will remain uniquely Scouts. Anything else built at our factory would only utilize the platform underneath and would have a completely unique body/design that doesn't look like a Scout. But so far, just rumors.
Thanks Jamie, so the platform will just be insert different body panels, colors and name here. The SM website, "The grit that defined the first generation of tractors and tools for the field translated seamlessly into a new era. That same ruggedness still drives Scout Motors today." and Audi and ... VW and ... all unique vehicles with the same drivetrain. Again, I cant wait to get one. The marketing message just seems disconnected from the reality of what you're doing. Maybe most consumers wont notice or care.
I think it's more involved than that based on other manufacturers that utilitize one or two platforms for every vehicle they make. The vehicles look nothing alike, but a lot of the frame, drivetrain and suspension components are interchangeable to save development cost. Example: You can bolt the high performance suspension and brakes from a Ford Focus RS onto a Ford Transit Connect van. That doesn't make them the same vehicle by any means.
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