Scout Warns VW Dealers Fighting Direct Sales That It’s Not Playing Around

Employing different lawyers is one way to distinguish a company from another, especially when having the same parent. Take Scout Motors versus Volkswagen, for example. Dealers have been up in arms ever since the EV brand announced it was bypassing the dealer network for direct-to-consumer (DTC) sales. Although no lawsuits have officially been filed, there’s been a lot of angry, why-I-oughta letter-writing. The latest has Scout threatening VW dealers to back off—or else.

Although the electric vehicles won’t arrive until 2027, Scout has accepted deposits for its Traveler SUV and Terra truck since their October unveiling. However, just before the holidays, the California New Car Dealers Association (CNCDA) made good on its threat to block the brand’s DTC retail approach by sending a cease-and-desist letter. 

The CNCDA letter claimed that because there is already an existing dealer network (a la Volkswagen), Scout’s DTC model directly competes with current franchises. A big no-no in California law books.

Note that Tesla was able to forgo dealerships because the then-startup had no legacy automaker ties. Subsequent non-legacy automakers, particularly startup EV brands like Lucid and Rivian, utilized the same DTC loophole. But because Scout is part of the VW Group, whose other brands have a slew of dealerships, the CNCDA posits that Scout has no legal basis to sell directly to consumers. 

Scout argues otherwise, of course.  Scout-Motors-Response-to-CA-Dealers-Counsel-1-17-2025

In a January 17 response to the December cease-and-desist, Scout General Council Neil Sitron matter-of-factly tells the CNCDA, “You are wrong.” Using that exact phrase and other similar verbiage, Sitron counters that Scout is wholly independent of Volkswagen Group of America (VWGoA), its South Carolina production plant was not funded by VWGoA, and VWGoA dealerships “have no right to Scout-branded vehicles.”

“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,” wrote Sitron. “Scout Motors and the Scout brand exist and operate independently of VWGoA and its brands, such as Volkswagen and Audi. They will continue to do so in the future.”

The dealer association immediately fired back. According to Automotive News, the CNCDA released a same-day response, stating that the group’s original cease-and-desist arguments remain unchanged. “We are prepared to act if needed,” said CNCDA President Brian Maas.

The CNDCA is no insignificant foe. Representing more than 1,300 new vehicle dealers in California, the CNCDA is the largest state automobile dealer association in the U.S. And it’s not alone. The National Automobile Dealers Association (NADA) is equally frustrated with Scout’s retail plans.

Outgoing NADA Chairman Gary Gilchrist also released a fist-pumping letter last week. He reiterated that automakers who compete with dealership partners will not be tolerated. Gilchrist wrote that such decisions are “unacceptable, plainly illegal, and will be challenged in statehouses and courthouses across the country—with NADA’s full support.”

The NADA beef specifically calls out VW and Honda. The latter, through a partnership with Sony, plans to sell its forthcoming Afeela 1 EV via DTC as well. To our knowledge, Honda hasn’t released a statement, but we see Scout is ready for the courtroom. Or, at the very least, to continue scrapbooking its hate mail.

“Scout Motors will not do business with anyone that threatens or tries to intimidate it, either directly or indirectly,” wrote Sitron in his letter’s final punches. “We trust that the CNCDA will reconsider its unwarranted threats and baseless positions regarding potential claims against Scout Motors. Should the CNCDA decide to act on its threats, Scout Motors will vigorously defend against them.”

All this drama years before anything rolls off the assembly line? Damn, these Scouts better be good.

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