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In December, Scout Motors’ dealer license was approved in Colorado, allowing the EV maker to sell its vehicles directly to consumers. On today’s episode of Inside Automotive, California New Car Dealers Association (CNCDA) President Brian Maas discusses the situation and the questions the approval raises concerning dealer rights.
The CNCDA, backed by the NADA, filed a lawsuit against Volkswagen and its affiliate, Scout Motors, in April 2025 for violating California franchise laws. The lawsuit alleges that VW is illegally competing with its dealer business partners by pursuing direct-to-consumer sales. California law dictates that if an automaker and its affiliates have franchisees, it must utilize its franchise dealer network. The automaker already has a broad network of VW, Audi and Porsche dealers nationwide that would welcome the chance to sell Scout Motor vehicles. The lawsuit is currently in federal courts, and Maas and the association are determined to prove that VW’s actions violate California law.
With VW and Scout securing an early win in Colorado, Maas urges other state dealer associations to begin thoroughly examining their state’s laws and determine whether they sufficiently protect franchise dealers from competition. He notes that several states have strengthened their laws recently; however, several states still need to revisit their statutes.
The CNCDA also filed a lawsuit against Sony Honda Mobility in August, asserting that the OEM is trying to compete with Honda and Acura dealers through its affiliate brand, Afeela. The case is also pending.
California dealers closed out 2025 well. While EV performance will be brand-dependent, Maas anticipates that EV sales will have dropped significantly during the final quarter following the expiration of the federal tax incentives and the pull-ahead purchases it spurred. However, Maas anticipates that overall sales across the market were solid and have normalized from the post-pandemic boom.
Looking ahead, Maas predicts that the primary challenge will be the rising prices of new vehicles over $50,000, which will affect affordability for consumers, especially those in lower-income households. The recent discontinuation of the Nissan Versa means there are currently no new vehicles available in the U.S. for under $20,000.
Many consumers are being priced out of the new vehicle market and are turning to used vehicles instead. This shift is putting pressure on inventory levels and pricing. The demand for used vehicles is so high that trade-in vehicles aged over eight years old, which previously would have gone to wholesale, are now being held in inventory to attract customers. In addition, competition in the used-car marketplace is intensifying, with national players such as Carvana, CarMax, and EchoPark Automotive posing significant challenges to franchise dealerships.
Maas predicts that, while there will be a slight pullback, electric vehicles will continue to perform well in the California market. On average, roughly 20% of the state’s new vehicle sales were electric, which is over three times the national average.
There are several significant initiatives on the CNCDA’s docket in 2026. This year, California Governor Gavin Newsom is terming out, and the association will be watching the gubernatorial election closely. The legislature is back in session for 2026, and they’ll also be keeping an eye on the legislation introduced.
California signed the Combating Auto Retail Scams (CARS) Act into law last year, and it will go into effect Oct. 1, 2026. The association is working diligently with compliance partners to support their dealers with the training, paperwork and processes needed to comply with the new law.
