Volkswagen Dealers Are Really Not Happy With Scout Motors

VW dealers sued Scout and Volkswagen on Tuesday in an attempt to block the brand's direct-to-consumer sales strategy.

Photo by: Scout Motors

By: Tim Levin

Mar 4, at 1:45pm ET

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Scout Motors, a new electric brand under the Volkswagen Group, has roiled the automaker’s dealers with its plans to sell direct-to-consumer, like Tesla, Rivian, and Lucid do.

On Tuesday, two VW dealers in Connecticut and New York launched a class-action lawsuit against Scout and Volkswagen, alleging that Scout’s plans violate the automaker's dealership agreement. The dealers claim that Scout is an extension of Volkswagen, and so it should be required to sell through dealerships.

Scout Terra Interior

Photo by: InsideEVs

“In truth, Scout is simply an offshoot of Volkswagen, and Volkswagen’s decision to sell the Scout EVs is a blatant breach of its contract with the dealers,” the lawsuit states. “VW dealerships are accordingly being deprived of their right and ability to sell these cutting-edge vehicles, at significant financial cost to the dealers.”

It’s the latest in a series of legal challenges aimed at derailing Scout’s DTC ambitions.

Earlier this year, dealers sued Colorado over the dealer license it granted to Scout. They allege that because the brand plans to sell extended-range EVs (ones with gas generators on board) it can't take advantage of the same carve-outs that EV-only brands do. Dealers in California and Florida have sued to block Scout's direct-sales plans in those states as well.

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A company spokesperson said it would not comment on ongoing litigation. But Scout and its CEO, Scott Keogh, have been clear that selling directly is the way to go.

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“Since its inception, Scout Motors and Volkswagen Group of America have both clearly and publicly stated that Scout Motors exists and operates independently of Volkswagen Group of America and its dealers, just as Scout Motors exists independently of all other manufacturers and their respective dealers,” the spokesperson said.

Scout Traveler

Photo by: Scout Motors

It makes sense that it would take the direct-sales approach. People generally like the upfront pricing and consistent experience of going to a Tesla or Rivian showroom. Afeela, Sony and Honda's new car brand, also plans to sell through owned-and-operated stores, a move that has ruffled feathers as well.

The question is whether Scout can navigate this legal minefield. It aims to start selling its fully electric and extended-range trucks and SUVs next year. The Terra and Traveler will be built at a new factory in South Carolina.

Contact the author: Tim.Levin@InsideEVs.com