VW dealers / NADA may sue to change Scout's direct-to-customer business plan

[timmyhil]

I think the point you guys are missing is Audis, Porsches, and Lambos ARE sold via the franchise dealership model and, as VW AG brands, are not sold via a direct to consumer sales model. Saying VW dealers should now expect to sell Audi/Porsche/Lamborghini product is not what the lawsuit is about. The lawsuit is about a legacy automotive corporation not selling a new brand via the legacy dealership sales/service model.

Someone brought up Ford's "mistake" of not selling its Model E division vehicles via direct to consumer sales and using the Ford franchise dealership network. Yet the Mach E is plauged with numerous design and workmanship issues that the direct to consumer sales model couldn't support. It seems Rivian is experiencing such an issue.

And yes, I understand the argument is Scout Motors is an independent American startup, which allows establishment of a direct to consumer sales model, but Uncle VW AG is footing the bill.

Scout Motors has stated 80% of its repair and service requirements will be solveable via software updates. It seems the Scout engineering is following Tesla's concept of a "software-defined" vehicle architecture. We've read on the Mach E forum this doesn't work so well with Ford and the Mach E.

When vechicle fleets owned by the public get into the tens of millions of vehicles in size, the franchise dealership model works better logistically. It will be interesting how the EREV fits into this lawsuit. If Scout Motors decides to use a corporate VW engine as the generator power source (as a lot of members here and the auto media believe), that certainly complicates Scout Motors defense against not using the American VW franchise dealership network.

All because they use a VW engine for the generator i feel is a stupid thing to be using as a defense for the Dealers. If i was Scout i would be working on making a ASE certificate for Scout Motors. They are an independent company using an engine from what would be considered a “supplier” this entire lawsuit is stupid hopefully Scout will win.

 

[Sparkland]

VW is laying off thousands of workers and shutting down plants in Europe. That may come to the US.

 

[SpaceEVDriver]

For electric vehicles not so much. It takes special heavy equipment to remove and service the battery. Mostly a non-starter for an independent service shop.

That's a myth mostly created by the way Ford bungled its Model-E program. They wanted every dealer to build out the infrastructure for DCFC charging.

The service equipment is not that expensive for a shop that wants in on this market. Everyone thinks the battery gear is expensive. It's over-priced for what it is, but it's not all that much. A battery lift table capable of managing the Hummer battery can be had for less than $5k; smaller ones are cheaper. The battery module tester and analysis kit is about $7k from the vehicle manufacturer and could be quite a bit cheaper if there wasn't a monopolistic surcharge on it. Most of the rest of the equipment necessary is already in most independent shops.

As someone who has always done my own vehicle maintenance, I've already priced this out. If I could get the certification without being attached to a dealer network, I could be up and running for less that $20-30k in startup costs, including lifts, HVB equipment and the training and certifications. If it was something I knew would be offered by Scout, I would seriously consider saving up for it.

 

[Timmdodge60]

That's a myth mostly created by the way Ford bungled its Model-E program. They wanted every dealer to build out the infrastructure for DCFC charging.

The service equipment is not that expensive for a shop that wants in on this market. Everyone thinks the battery gear is expensive. It's over-priced for what it is, but it's not all that much. A battery lift table capable of managing the Hummer battery can be had for less than $5k; smaller ones are cheaper. The battery module tester and analysis kit is about $7k from the vehicle manufacturer and could be quite a bit cheaper if there wasn't a monopolistic surcharge on it. Most of the rest of the equipment necessary is already in most independent shops.

As someone who has always done my own vehicle maintenance, I've already priced this out. If I could get the certification without being attached to a dealer network, I could be up and running for less that $20-30k in startup costs, including lifts, HVB equipment and the training and certifications. If it was something I knew would be offered by Scout, I would seriously consider saving up for it.

I was wondering myself what the cost for independent shops would to be able to ramp up equipment and training in order to service EVs. Your post reinforces what I initially thought and what I've learned by limited research. I don't think the costs will be a deal breaker for most shops, unless they're already financially strained without capital improvement planned for. In that case, they probably aren't going to make it by serving ICE vehicles only either.

It appears that the resistance to make the investments in equipment and training at this time is because there aren't enough EVs on the road yet that need significant repairs since most of them are still relatively new. And with battery durability and longevity so much improved in current vehicles, the batteries aren't likely to require replacement for a long time. The demand for that type of service may increasingly become lower as time goes on. I think that most of the servicing requirements will come in the form of typical electrical diagnostics, suspension, tires, and body repair work, similar to modern ICE vehicles.

 

[timmyhil]

That's a myth mostly created by the way Ford bungled its Model-E program. They wanted every dealer to build out the infrastructure for DCFC charging.

The service equipment is not that expensive for a shop that wants in on this market. Everyone thinks the battery gear is expensive. It's over-priced for what it is, but it's not all that much. A battery lift table capable of managing the Hummer battery can be had for less than $5k; smaller ones are cheaper. The battery module tester and analysis kit is about $7k from the vehicle manufacturer and could be quite a bit cheaper if there wasn't a monopolistic surcharge on it. Most of the rest of the equipment necessary is already in most independent shops.

As someone who has always done my own vehicle maintenance, I've already priced this out. If I could get the certification without being attached to a dealer network, I could be up and running for less that $20-30k in startup costs, including lifts, HVB equipment and the training and certifications. If it was something I knew would be offered by Scout, I would seriously consider saving up for it.

I would live to see Scout offer a self repair guide. And Training for techs. Since Evs aren't hard to work on. Ive done it. I work on bmws everyday.

 

[SpaceEVDriver]

I checked two of the ALI-certified lift makers, Rotary and Bend Pack. Their EV battery lift tables are over $11,000 and $10,000 respectively. Also, depending on manufacturer and model, the battery may have specific contact points for supporting it and gaining access to the attachment bolts. I'm not sure it is as simple as just buying a generic EV lifting table. Maybe it is, but even with the USA market at some 8 - 10% EV share, there are few independent EV service shops. Also, with a Federal mandate of 8 years/100,000 mile EV battery warranty, are shops in the near term going to invest $20K - $30K in equipment and training for such a small market share of repair work? Time will tell.

I think you're driving away from the point--just because it isn't being done now doesn't mean it can't be done. There are few independent service shops for EVs because the manufacturers are both beholden to and contractually saddled with the dealers as service shops. A non-dealer model can get us away from that and open up service options to independent shops.

The point is if Scout helped this happen, they would be able to make a service network grow much more quickly than if they try to build a few fancy service centers themselves. The return on investment of building out new service centers vs the ROI of subsidizing bringing many hundreds of service centers into the fold quickly is significant. And the goodwill this would bring is probably even more valuable.

I don't know about anyone else, but nothing about the proposed Scout Studios appeals to me. If I'm not going to do service on my own vehicle, I want to drop it off, get a shuttle or rental car, and go about my day until it's done. I don't want to sit around at the dealership and wait. I have things to do.

 

[Timmdodge60]

An interesting and informative article on how EVs will impact independent auto repair shops:

https://autoleap.com/blog/how-will-electrification-impact-independent-auto-repair-shops/

 

[timmyhil]

To relieve the stress I was just talking with Jamie from Scout. I ask if he had any news about the lawsuit.

he told me, “There isn't anything to talk about for now. Just some saber rattling.”

.

 

[evluvrrr]

I would walk from my reservation if forced to deal with a local VW dealer. My local dealership has changed names 3 times in the past decade, they are the sole reason I won’t consider buying an Audi for my wife.

VW and Audi dealer experiences are completely different. Audi has some of the best dealers usually with a very high touch level of service. VW is more of a commodity brand and as such they care less about your individual experience with the brand. I’ve owned 2 Routans and the dealers were “ok” in terms of service but not good at all with sales. That being said VW group as a whole has a very poor and uneven customer experience across their entire portfolio. Porsche, Lambo, and Bugatti Rimac are like completely separate businesses and Scout likely will be similar.

 

[Lucky Logan]

Another article on this:

https://www.autoweek.com/news/a62785957/scout-motors-direct-sales-model-legal-action/

Legal Action Brews in Battle over Scout Motors’ Direct-Sales Model

A courtroom is likely to be the next battleground as dealers and Scout Motors clash over retailing.

 

[Callsign_DISCO]

Nothing endears you to potential customers quite like suing to make sure they don't have the freedom to buy from whoever they want to buy from.... /sarc

 

[Yamapro]

VW and Audi dealer experiences are completely different. Audi has some of the best dealers usually with a very high touch level of service. VW is more of a commodity brand and as such they care less about your individual experience with the brand. I’ve owned 2 Routans and the dealers were “ok” in terms of service but not good at all with sales. That being said VW group as a whole has a very poor and uneven customer experience across their entire portfolio. Porsche, Lambo, and Bugatti Rimac are like completely separate businesses and Scout likely will be similar.

My VW and Audi dealer are one and the same. The dealership has changed names three different times in the past few years. They are well known for being a horrible dealership, the people that I know that own Audi drive three hours away to utilize a different dealer.

 

[Foobar]

Do VW dealers now assume they should be able to sell Audis, Porsches and Lambos just because they fall under the VAG umbrella. Honestly, as 40+ year VW owner, their dealers are one of, if not the biggest, failure the brand has. As others have said, I’ll cancel my deposit if I need to buy from a VW dealer.

Agree - and why just VW? Perhaps Porsche dealers should be able to sell them too. And why stop there? Let Ducati dealers sell Scout, Porsche, and VW vehicles... we can play this game all day.

 

[Donnie]

Zero chance VW dealers win this one. Dealers know their value is diminishing - so they have to fight but it’s useless.

Every OEM would do away with dealers if they could and weren’t bound contractually. VW set this model to compete with Tesla and Rivian.

What will be interesting is to see how Scout works with certain states that do not allow circumventing dealerships with direct-to-consumer. I believe South Carolina has no Tesla or Rivian offices because SC doesn’t allow it. Will SC change since they are building the Scout? I guess so since you’ll be able to take delivery at the factory (like BMW).

Currently I live in one of those dealer locked states but I would assume they would process it just like Tesla. I purchased my Tesla all through the app and it has tabs where it requires info like loan, license etc. Then on delivery date I went to the closest Tesla service station which for me is in Pensacola, FL around 45 mins to hour away. They then mailed me a packet that I took to the DMV to register my vehicle. The agent only needed to see the vehicles vin to confirm paperwork. Went very smooth So for me I loved the whole process and it went very smooth. Much better than any dealership purchases where they hold you hostage for hours of time to force deals. I would possibly even change my mind if they were forced to sell through dealerships. We own a VW and my local dealers service department sucks. I don’t go anymore and do all my service myself now. However, if Scout still would offer picking it up at their plant then I would like to do that route. Especially if they would credit the delivery fee back to you. I would love to take the scenic route back from the plant and enjoy my new truck.

 

[Jrgunn5150]

Dealers have had a monopoly for decades, and Tesla and EV start up's are bringing it down.

Hope VW wins.