Colorado’s approval of Scout Motors’ dealer license is sending ripples well beyond the state, putting franchise dealers nationwide on high alert. On today’s special episode of Inside Automotive, NADA CEO and President, Mike Stanton, and Virginia Auto Dealers Association CEO and President, Don Hall, discuss the implications of the decision and what it could mean for dealers across the country.
While the situation unfolding in Colorado is concerning, Stanton emphasized that the dealer community should take some reassurance in knowing that NADA has been actively confronting the direct-to-consumer threat for years. The issue has remained at the top of NADA’s agenda for more than four years, and the organization is currently engaged in legal challenges in both Florida and California.
While the court’s decision represents an early win for Volkswagen, it marks the beginning of a lengthy legal battle rather than a finalized outcome. Staton is confident that the dealer community will ultimately prevail as the process continues.
"Once all the talking and letter-writing is over, it's time to fight. And NADA is in that fight in a very meaningful way." — Mike Stanton
Hall urges dealers not to take a passive stance. This issue will not resolve on its own and requires active participation from the dealer body. That includes making phone calls, engaging with local legislators and contributing to advocacy efforts. He also encourages dealers to stay informed by asking their state associations how they are supporting NADA’s efforts.
Both leaders make it clear that this is not an isolated issue. Other OEMs are closely watching how the Scout Motors situation unfolds. If Volkswagen succeeds, other manufacturers are likely to pursue similar strategies.
"This is the beginning of the end of the franchise system if we don't prevail." — Don Hall
In his view, there is already tangible evidence of those intentions. He points to the letter sent earlier this year by the Alliance for Automotive Innovation to the Department of Justice, which argued that state franchise laws restrict competition and harm consumers. While several manufacturers have privately expressed support for the franchise system, this support has not been reflected publicly, revealing the true position of many OEMs.
Volkswagen’s decision to pursue direct competition with its dealers has also damaged trust in the franchise relationship. The carmaker built its success in the U.S. through its dealer network. Dealers have invested billions of dollars to support the brand and remained loyal even through tough times such as the 2015 Dieselgate scandal, the sudden acceleration of Audi, and problems with the ID.4.
As the legal and legislative paths ahead take shape, Stanton stresses that NADA is well-positioned to support state associations as new challenges emerge. Several members of the administration and key Senate connections are expected to examine the situation more closely as it develops.
Stanton and Hall urge the dealer community to remain engaged in advocacy efforts. Unity will be critical in protecting the franchise system. While Volkswagen may have won in Colorado, the fight over the franchise system is far from over.
