Scout Motors hasn’t unveiled a production vehicle yet, but Volkswagen dealers in California are already threatening to sue the new manufacturer. Apparently, they aren’t happy about the company’s plan to nix the traditional dealership model and sell directly to buyers.
The California New Car Dealers Association (CNCDA) sent strongly worded cease and desist letters to Scout Motors and Volkswagen on December 20, claiming both brands are in violation of a California law signed at the beginning of 2024.
Photo by: Scout Motors
The letter, posted online by the association, states Assembly Bill 473 (AB 473) would “prohibit Scout Motors or any new vehicle line from a manufacturer with a dealership network in California from being sold directly to consumers. Volkswagen, the parent company of Scout Motors, could sell Scout vehicles in the state if they sell them at any of their other vehicle line company’s dealerships like Volkswagen, Audi, Porsche, Bentley, or Lamborghini. Volkswagen Group could also create a new franchise network for Scout Motors if they want to keep a separate brand distinct from their other models.”
The letter also alleges the General Counsel for Scout Motors acknowledged that the finalized bill would prohibit Scout from selling vehicles directly to consumers in California. AB 473 was signed into law and went into effect on January 1, 2024.
A Scout Motors representative offered the following statement to Motor1:
Scout Motors Inc. is an independent automotive manufacturer that will operate a new manufacturing plant in Blythewood, South Carolina. Scout Motors has sole responsibility for the engineering, design, and manufacture of Scout vehicles. The proprietary vehicle design and first-of-its-kind electric platform created for Scout vehicles have never been utilized in any other vehicle nor sold by any other automotive brand.
Our future customers are at the heart of every decision we make as we work to build our Production Center and to ultimately manufacture and sell great vehicles. Just as utilizing franchised dealers may be appropriate for some brands and their customers, utilizing a direct sales model best supports our customers and our strategic customer-first vision as we launch a new vehicle platform, a new production center, and a new retail network to bring the Scout Traveler SUV and Scout Terra truck to market.
As Scout Motors does not possess the knowledge, information, or desire to comment on the relationships between any manufacturer and any group of franchised dealers, Scout Motors refers all questions pertaining to Volkswagen Group of America and Volkswagen franchised dealers to Volkswagen Group of America.
Photo by: Scout Motors
It’s certainly no secret that VW is connected to Scout Motors. But when the Scout reboot was announced in 2022, VW Chief Financial Officer Arno Antlitz claimed it would mostly operate on its own.
“The company we will establish this year will be a separate unit and brand within the Volkswagen Group to be managed independently,” he said. “This aligns with the new group steering model—small units that act agilely and have access to our tech platforms to leverage synergies.”
In October 2024, Scout Motors unveiled concepts for the Terra pickup and Traveler SUV. The company plans to launch production models in 2027 and began taking $100 refundable reservations “for the opportunity to configure and purchase Scout vehicles when they become available,” per a Scout Motors representative.
“Volkswagen’s direct sales via its Scout brand represent a direct threat to the jobs, investments, and consumer protections California’s franchise laws are designed to safeguard,” said CNCDA President Brian Maas. “We strongly encourage Volkswagen to heed our call to abide by California law and immediately stop offering Scout vehicles directly to consumers without using their business partner local dealers.”
