Scout Motors, an electric vehicle subsidiary of Volkswagen, plans to sell its recently unveiled first two models directly to consumers, much to the dismay of the National Automobile Dealers Association (NADA) and automotive dealers around the country. Mike Stanton, President and CEO of NADA, has vowed to stand behind Volkswagen and Audi dealers, promising to challenge “all attempts to sell direct in courthouses and statehouses all across the country.”
In many states, original equipment manufacturers (OEMs) are not allowed to sell directly to consumers, nor are they allowed to compete with their dealers. While there are exceptions to these restrictions, they generally exist for independent brands that do not have a dealer network, such as Tesla. Despite Scout’s insistence that it is “an independent automotive manufacturer,” Volkswagen’s involvement has complicated the matter.
While Scout can attempt to distance itself from Volkswagen, in the eyes of NADA, the brands are inextricable. NADA does not view Scout as “independent” – instead, it views Scout as a legacy manufacturer due to the Volkswagen connection.
Volkswagen acquired the Scout trademark and name during its acquisition of Navistar in 2021. Scout’s Terra pickup truck and Traveler SUV, which debuted Oct. 24, 2024, signal a revival of the former American vehicle brand that existed throughout the 1960s and 1970s.
Why it Matters
While other electric vehicle manufacturers such as Tesla, Rivian and Lucid sell directly to consumers, Scout is different. Its connection to Volkswagen, a legacy manufacturer, has profound implications for automotive dealers. Given Volkswagen’s involvement, Scout would theoretically have access to sell its vehicles through existing Volkswagen dealers. Instead, Scout has opted to sell its vehicles directly to consumers on a digital platform, effectively sidestepping its network of dealers throughout the country.
Scout announced plans to launch 25 “Scout Workshops” and “Scout Studios” around the county within the next five years. These brick-and-mortar locations will serve as marketing and sales locations and offer customers the opportunity to test-drive the vehicles.
NADA’s Response
In response to Scout’s announcement, Stanton stated that Volkswagen’s “decision to attempt to sell Scout vehicles direct to consumers and compete with its U.S. dealer partners…[is] disappointing and misguided.” He added that once Volkswagen signaled its intention to revive the Scout brand, NADA attempted to engage in discussions with the companies, but Scout and VW “avoided engaging with or even responding to NADA for months.”
Despite the pushback from NADA, Scout doubled down stating that “Scout Motors does not have franchised dealers, now or in the past. Scout vehicles have never been sold through any brand, including the Volkswagen and Audi brands. In the future, Scout Motors will operate an independent and exclusive network of retail locations.”
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