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

[joewilk45]

Worry about what we can control and that's eating well tonight hugging those we love and hopefully waking up tomorrow to see Santa's magic without a headache

 

[volsdoc81tx]

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.”​

Well, that just means that California will miss out.
Scout has a right to facilitate sales anyway they deem necessary.
Since it’s owned by VW, then the parent company has their rights.

 

[dmwilsonh]

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.

Tesla does not have franchisees or a dealer network

 

[Sunrack]

The Scout marketing strategy is for it to be a full American endeavor - and it is. Selling alongside VWs, Porsches & Audis would be incompatible. We're not making and selling Kubelwagens here. VW is the primary investor only. Scout needs to let us have a piece of the action and issue an IPO.

 

[Sunrack]

If California courts wrongly decide in favor of the VW dealer group, Scout should only sell through International Truck franchises.

 

[timmyhil]

If California courts wrongly decide in favor of the VW dealer group, Scout should only sell through International Truck franchises.

Thing is that International dealerships also mark up prices. Scout obviously doesn’t want that. But as on what being discussed in the official Scout Community forum. Scout wouldn’t have launched the reveal and wouldn’t be building a factory if they didn’t have this all planned out in advance. That’s why they have a hefty law team.

 

[HCTacoFan]

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.

I believe some similar law was recently passed in Florida too...

 

[JesseS]

I am not worried, if the ban stands in California (I don't think it will) I will just drive to Vegas (or the nearest customer center and pick it up there.)

 

[joewilk45]

None of us know what the legal funding agreement between VW and Scout weather it spells out future funding milestones and whats Scouts dependence and responsibilities to meeting funding requirements. So now that a suit has been filed we shall all know firsthand. In meantime let's enjoy what we do know. A great icon is going to be made better and we all have the opportunity to own one

 

[ajkitebrder40]

I didn't read all 5 pages of the posts, but South Carolina has a similar law (it's been on our news):

https://www.postandcourier.com/poli...8uUVyKuvg_aem_7ORIVWJ3_5WK0e_F8BRg0g#cxrecs_s

 

[Wiredawg]

D2C is the future or at least it will be some variation. The days of dealing with 25 year old kids trying to tell me about a truck/car is so outdated at this point, change is inevitable.

I completely agree, I will further add the commission salesperson model should be done away. The large dealership models need to be revamped and those state laws need to be rewritten. There is no need for this middleman anymore, stop upselling/ripping off consumers on nonsensical add-ons for commission purposes. Carvana is a great example of this. What the dealerships need to concentrate on is the maintenance side where one's vehicle can be professionally & properly serviced. The thought would be the dealerships of their own brand(s) would know their vehicles better. This is where all dealerships appear to be faltering. Their sales side has great reviews, but the maintenance side of the same dealership not so much. This part of entire industry needs to be remodeled as a business.