California dealers demand Scout / VW stop direct-to-consumer sales with cease and desist letter

[Scout Fan]

https://www.autonews.com/volkswagen/scout/an-california-dealer-association-scout-letter/

December 23, 2024

The Calfornia New Car Dealers Association has demanded that Scout Motors / VW Group stop taking deposits for the Scout Traveler and Terra by claiming that it violates amended state law that prohibits direct vehicle sales to consumers.

On Dec. 20 the association sent a letter to the head lawyers at Scout Motors and VW Group that said the two companies' plan to sell Scout vehicles direct to consumers "wrongfully cuts new and existing VW dealers out of an opportunity" and directly violates a section of California's law covering new-vehicle sales.

Updated with the cease and desist letter from the Calfornia New Car Dealers Association (CNCDA) -- cease-and-desist letter:

“Under Vehicle Code section 11713.3(o), automobile manufacturers and their affiliates are forbidden from competing with their own vehicle franchisees. Scout is an affiliate of VW under California law. Vehicle Code section 11713.3(z) defines ‘affiliate’ as ‘a person who directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, another person.’ [emphasis added by CNCDA]. Since as early as 2022, VW has been directly and substantively involved in Scout’s development and revitalization of its vehicles, including VW’s investment of billions of dollars into a Scout production plant in South Carolina.”​

 

[Anjnasm2024]

Which is so funny because Tesla is from cali and that is literally their business model.

 

[Scout Fan]

Which is so funny because Tesla is from cali and that is literally their business model.

According to the article:

California law covering new-car sales and marketing was amended to permit competition “so long as the vehicle is being sold using new or existing franchisees to sell and service those vehicles.” Tesla, which has operated without franchisees since it was founded, is exempt from the amended law.​

​

The amendment, approved by the California’s legislature and signed into law, took affect Jan. 1 2024​

​

Don't know why / how Tesla is exempt from the law.

 

[Anjnasm2024]

The fact that it was only signed this year makes me think Tesla had their fingers in it. Also this VW dealers are going to be impacted storyline is getting tired. They don’t sell Bentley, Audi, Porsche, or Lamborghini through VW dealers why is this different.

 

[timmyhil]

Scout is allowing factory pick up. I understand that people don't want to drive or fly in but thats how its gonna be. States don't want to except that D2C is the new way.

 

[JesseS]

If this stands (it won't) I will just fly to a state the allows it or do a factory pick up.

 

[Anjnasm2024]

Canada has never raised any kind of bs with this business model which is nice.

 

[RMK!]

The dealers can stamp their little feet and hold their breath but that won't change the inevitability of Manufacturer Direct Sales. That sales model is the only way to achieve clean technology vehicles at scale and with affordable prices.

 

[JesseS]

They are only upset because D2C sales prevents them from ripping you off.

 

[timmyhil]

Canada has never raised any kind of bs with this business model which is nice.

51State of America??

 

[MadGreek]

https://www.autonews.com/volkswagen/scout/an-california-dealer-association-scout-letter/

December 23, 2024

The Calfornia New Car Dealers Association has demanded that Scout Motors / VW Group stop taking deposits for the Scout Traveler and Terra by claiming that it violates amended state law that prohibits direct vehicle sales to consumers.

On Dec. 20 the association sent a letter to the head lawyers at Scout Motors and VW Group that said the two companies' plan to sell Scout vehicles direct to consumers "wrongfully cuts new and existing VW dealers out of an opportunity" and directly violates a section of California's law covering new-vehicle sales.

Here's the cease and desist letter from the Calfornia New Car Dealers Association (CNCDA) -- cease-and-desist letter:

“Under Vehicle Code section 11713.3(o), automobile manufacturers and their affiliates are forbidden from competing with their own vehicle franchisees. Scout is an affiliate of VW under California law. Vehicle Code section 11713.3(z) defines ‘affiliate’ as ‘a person who directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, another person.’ [emphasis added by CNCDA]. Since as early as 2022, VW has been directly and substantively involved in Scout’s development and revitalization of its vehicles, including VW’s investment of billions of dollars into a Scout production plant in South Carolina.”​

 

[joewilk45]

Dealers should see what just happened with Cadillac when they rolled out the Lyriq. They required dealers to modify Their dealership's at high cost or be bought out. VW can issue a 20 million dollar dealership model making current dealerships to take buyouts allowing Scout to swoop into desirable vacated dealerships. Either way we have till next Christmas to worry about this stuff. Santa coming !!!

 

[timmyhil]

It still makes no sense. I have DMs from Jamie saying that VW is separate from Scout and that VW is only an investor and that in the investment package, they are allowed access to the Engine Bin of VW and that VW checks in to see progress but that’s it. It’s the same way Lamborghini works with VW. So technically Scout is a separate Company entirely, hopefully the lawyers work in Scouts favor.

 

[Trailguide79]

It still makes no sense. I have DMs from Jamie saying that VW is separate from Scout and that VW is only an investor and that in the investment package, they are allowed access to the Engine Bin of VW and that VW checks in to see progress but that’s it. It’s the same way Lamborghini works with VW. So technically Scout is a separate Company entirely, hopefully the lawyers work in Scouts favor.

No such thing as bad publicity......in this case its not really bad either.....just free publicity.
I personally will be picking mine up from the Blythewood facility, and would offer FREE transportation (provided I don't have a competing obligation) from the Columbia Metropolitan Airport to the facility. Frankly it would be better than cars and coffee for me being retired, and living in Columbia, SC so close to where the magic is. I will probably be living at the Scout Experience center, and I suspect the other centers will be in states that aren't litigious on frivolous matters. There is already a work around in case VW attorneys somehow "lost" the battle in CA.

 

[timmyhil]

No such thing as bad publicity......in this case its not really bad either.....just free publicity.
I personally will be picking mine up from the Blythewood facility, and would offer FREE transportation (provided I don't have a competing obligation) from the Columbia Metropolitan Airport to the facility. Frankly it would be better than cars and coffee for me being retired, and living in Columbia, SC so close to where the magic is. I will probably be living at the Scout Experience center, and I suspect the other centers will be in states that aren't litigious on frivolous matters. There is already a work around in case VW attorneys somehow "lost" the battle in CA.

To be perfectly honest i cant see CA winning. If you’re gonna screw one brand might as well screw tesla and rivian too. CA will do anything to destroy the little guy in the competition.

Also i love that idea of the pickup and drop-off.