California Lawsuit Against Scout’s Direct Sales Could Change How You Buy Cars

- The California New Car Dealers Association (CNCDA) has filed a lawsuit against VW and Scout.
- It says the two are bypassing dealer franchise laws in the state by selling directly to consumers.
- Scout previously rejected the CNCDA’s demands, but now vows to defend itself in court.
The latest episode in the ongoing feud between dealers and Scout Motors has escalated into a full-blown lawsuit. The California New Car Dealers Association (CNCDA) has filed suit against Volkswagen and Scout, accusing them of bypassing the law. Specifically, the CNCDA wants VW and Scout to sell their vehicles through dealerships instead of direct-to-consumer sales.
Forget about free-market dynamics, dealers are fighting for their slice of the pie, and they’re taking it to court to make sure they get it.
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Brian Maas, CNCDA President, stated that “VW dealers would welcome the opportunity to sell Scout trucks and SUVs, but their manufacturer business partner is denying them that opportunity, in direct violation of California law.” The accusation here is that VW’s Scout Motors is allegedly breaking the law by allowing customers to buy vehicles directly from them, bypassing the traditional dealer model.
Is VW Picking and Choosing?
Maas didn’t stop there. He added, “Volkswagen can’t pick and choose which vehicles to sell on its own or through its franchised dealer network, reserving the most profitable or desirable vehicles for itself. Illegal competition will harm not only dealers but also the communities and car buyers that they serve.”
Of course, he fails to mention how wild markups, like the ones imposed by the very California dealers he represents, also hurt car buyers.
Scout and VW Fire Back
It didn’t take long for Scout and VW to respond, and unsurprisingly, both disagree with the CNCDA. After the dealer association sent a cease and desist letter to the automakers last year, Scout responded with a strongly worded letter. “VWGoA is not authorized by Scout Motors to sell, and will not be selling or distributing, Scout-branded EVs in California or in any other state. Scout Motors and the Scout brand exist and operate independently of VWGoA and its brands such as Volkswagen and Audi,” said Scout’s general counsel, Neil Sitron.

And if you thought Scout was backing down, think again. Sitron added, “Scout Motors will not do business with anyone that threatens or tries to intimidate it, either directly or indirectly…. should the CNCDA decide to act on its threats, Scout Motors will vigorously defend against them.”
Now, it looks like Scout will have to do exactly that – defend itself in a court of law. The CNCDA is accusing the automakers of unfair competition, false advertising, and is seeking civil penalties that could top $35 million.
It gets more interesting as Maas claimed that this suit “sends a message to every automaker.” That message could end up being “here’s how to sidestep dealers.” Tesla, Lucid, and Rivian have already proven that dealers aren’t necessary. If Scout and VW win this lawsuit, it’ll show legacy automakers a new path to direct sales, a model that consumers seem eager to engage with.
