The Scout Direct Sales Drama
To say that dealers don’t like direct-to-consumer sales is a massive understatement. Of course, the main reason is that it has the potential to put them out of business. With that, dealers have been filing case after case against Volkswagen of America for its direct sales plan for Scout Motors. Talk about birthing pains.
If anything, the cases filed so far have been attracting far more attention to the brand than Scout’s actual products. There have been a few wins for Scout so far, but the dealers keep pushing back.
Meanwhile, in California
The California New Car Dealers Association filed a lawsuit against Volkswagen of America and Scout Motors last April 2025, claiming that both had violated an amended state law that took effect Jan. 1, 2024. Per Automotive News, the law “requires affiliated brands to use franchised dealers to sell and service vehicles.”
The same association also claimed that the two companies did not comply with the state’s Unfair Competition Law and False Advertising Law when Scout began accepting $100 (refundable) deposits from customers.
The suit said that Scout did not tell its customers that such a transaction was illegal in California, hence falling under false advertising. It’s not the first time Scout has been slapped with that same claim.
“Volkswagen can’t pick and choose which vehicles to sell on its own or through its franchised dealer network, reserving the most profitable or desirable vehicles for itself,” said Brian Maas, president of the California New Car Dealers Association. The association also wants the company fined $2,500 for each transaction, estimated at around $35 million.
Scout Motors
Dismissed and Denied
Of course, Volkswagen of America has filed a motion to dismiss the charges. The result is a mixed bag for the company, and the fight for Scout’s direct sales model will continue. On one hand, a California federal judge dismissed a false advertising claim. However, regarding the unfair competition violation, the motion to dismiss was denied.
Following the denied dismissal, Maas said, “This ruling confirms what California law recognizes: manufacturers cannot use affiliate brands to unlawfully compete against their own dealers. Volkswagen dealers would welcome the chance to sell Scout vehicles to their customers, but Volkswagen continues to shut them out.”
So, in California at least, it’s a ‘win’ of sorts for both parties. Mind you, Scout and Volkswagen of America still have a mountain of legal battles ahead, and as long as there are dealers, there will always be pushback against direct-to-consumer sales.
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