Scout Motors was granted a dealer license in Colorado that enables it to sell directly to customers, intensifying national concerns among franchised dealers. On today’s episode of Inside Automotive, Matthew Groves, CEO of the Colorado Automobile Dealers Association (CADA), shares his perspective and discusses the broader implications of the decision for dealers nationwide.
Scout Motor’s dealer license is valid only until October 2026, but the EV maker will not begin production until 2027, so the automaker will need to seek renewal before vehicles reach the market.
At the heart of the issue is Volkswagen’s position that Scout Motors is not a subsidiary brand. Groves challenges that assertion, noting that Scout’s sole investor is Volkswagen and the move is a blatant attempt to circumvent state franchise laws.
Colorado is one of 25 markets Scout has identified for brand-owned rooftops. The state has earned a reputation as EV-friendly, with EV and plug-in hybrid penetration holding at approximately 26% despite the expiration of federal tax credits.
Colorado’s legislative session is constitutionally limited to 120 days. The decision surrounding Scout Motor emerged near the tail-end of the session, and the time constraint limited the time available to respond. Despite Scout’s win, Groves emphasizes that the ruling doesn’t represent the final outcome. CADA’s board is actively evaluating next steps, with a decision expected imminently, and the issue is likely to continue evolving through additional legal action.
"The burden is on us. We have to be right every time—they only have to be successful once."
This is a high-stakes situation for the franchise system, and the risk is imbalanced. Dealer advocates must be right every time, while manufacturers need only one successful challenge to disrupt the franchise system.
Other automakers are watching Colorado’s outcome closely. The situation highlights potential procedural vulnerabilities that manufacturers may seek to exploit across states. CADA is focusing on preparing defenses against similar efforts in the future. Grove emphasizes the industry’s long-standing legacy of successful advocacy and legal precedents that have protected the franchise system.
While the situation with Scout Motors raises concerns for franchise dealers, Colorado’s overall automotive market continues to perform strongly. Despite rising interest rates, tariffs, and persistent affordability issues, the state remains resilient. Groves expects Colorado to close 2025 with approximately 215,000 vehicle sales, in line with the state’s historical trends. Looking ahead to the new year, he says CADA’s mission is clear: to remove barriers so dealers can continue selling vehicles and serving customers.
