The National Automobile Dealers Association (NADA) recently sent a letter to Volkswagen Group CEO Oliver Blume and other executive board members. In the letter, Stanton urges them to reconsider Scout Motors’ decision to sell vehicles directly to consumers, bypassing the traditional dealership model.Â
Dated March 6 and obtained by CBT News, the letter raises concerns about the potential impact on Volkswagen’s U.S. dealership network and the legal challenges that may arise.
In the letter, NADA’s CEO, Mike Stanton, expressed that the decision by Blume and the Board of Management to distribute Scout vehicles directly in the U.S. was “misguided” and “violates well-established state franchise laws.” He also pointed out that Scout would have instant market traction if it utilized the dealership franchise system. Stanton warned that the alternative would be strained relationships with U.S. dealers and prolonged legal disputes across individual states.Â
Additionally, Stanton referenced a previous letter he had sent to Blume in July 2023, which went unanswered, reiterating NADA’s position that the franchise system is the best and most efficient way to deliver the customer experience in today’s marketplace. He also pointed to several past examples of OEMs successfully launching new brands in the U.S. by leveraging a subset of their existing dealer networks.
Stanton further emphasized that NADA fully supports Volkswagen, Audi, and Porsche dealers who feel “left behind” by this decision, particularly those who have made significant investments in the brands and supported them through challenging times, including the Audi acceleration issue, the VW diesel emissions scandal, and the recent quality challenges with the ID.4 electric crossover.Â
Moreover, the letter requests a meeting with Blume to discuss alternatives to the direct sales approach. Stanton suggested meeting at Blume’s office in Germany, his own office in Washington, or another suitable location.
In contrast, despite the backlash, Volkswagen Group maintains that Scout is an independent brand, and executives argue that the direct sales model is a key part of their strategy to increase market share in the U.S., where it is currently around 4%.
However, the controversy has already led to legal actions. In February, a group of Volkswagen and Audi dealers in Florida filed a lawsuit against Scout, claiming that the direct sales model violated state laws. The California New Car Dealers Association (CNCDA) also filed a complaint, asserting that Scout is an affiliate of Volkswagen and thus prohibited from bypassing dealerships under state law.
Scout, in response to the criticism, continues to defend its direct sales model, underlining its status as a startup and the flexibility that comes with that position. Scout also maintains that a traditional dealer network does not constrain it and is free to make decisions that align with its business strategy.
Stay tuned for further developments on this story right here on CBTNews.com
