VW and Audi dealers are suing Scout over its no-dealers plan

A coterie of Florida car dealers filed a lawsuit this week against Scout Motors over its direct-to-consumer sales model. The complaint alleges that Scout, which operates under the Volkswagen Group, is in violation of Florida law which blocks automakers from trying to bypass dealers by selling directly to consumers. The suit, which was filed by nearly two dozen Audi and VW dealers, asserts that Scout’s plan to sell its vehicles in Florida is “unlawful” since it has yet to secure a license from the state’s Department of Highway Safety and Motor Vehicles. The dealers are seeking a court injunction blocking Scout from selling directly to Florida residents. Scout hasn’t sold a single vehicle yet — its first vehicles, an electric truck and SUV, were revealed last October and won’t go into production until 2027 — but the dealers claim the company is violating the law by accepting $100 deposits from interested customers. “Florida has a clear definition of the word ‘sell’ and Scout Motors is actively selling in violation of state law,” said John Forehand, an attorney representing the dealers, in an email. “If you take a buyer deposit in Florida, it’s the same as making a sale, and that’s simply not allowed.” Almost as soon as Scout’s EVs were announced, dealers were grumbling about the possible illegalities of its sales model. Dealers have an iron grip on car sales in most states, having lobbied over the decades to enshrine their business model in law. Some companies like Tesla, Rivian, and Polestar have found workarounds. But dealers have sought to snuff out most direct-to-consumer attempts, filing lawsuits and lobbying heavily through their trade group, the National Automobile Dealers Association. But Scout wasn’t shy about bucking the norms. And the fact that it was doing so under the umbrella of the Volkswagen Group made it all the more ripe for conflict. Tellingly, the Florida dealers who filed the complaint all sell VW and Audi (another VW Group company) vehicles. A spokesperson for Scout declined to comment on the lawsuit, instead pointing to comments made by Cody Thacker, VP for Growth, last October: “Just as utilizing franchised dealers may be appropriate for some brands and their customers, utilizing a direct sales model best supports our customers and our strategic customer-first vision as we launch a new vehicle platform, a new production center, and a new retail network to bring the Scout Traveler SUV and Terra truck to market.”