Colorado’s decision to grant Scout Motors a dealer license, allowing the Volkswagen-backed brand to sell vehicles directly to consumers, has raised concerns among franchise dealers and industry experts. On today’s episode of Inside Automotive, Mike Maroone, CEO of Mike Maroone Auto and former AutoNation executive, calls the move a “circumvention of the traditional franchise system” that undermines dealer investments and long-standing protections.
Maroone dismissed Scout Motors’ claim of separation from its parent company, Volkswagen (including the VW and Audi brands), as insincere. He stated, “If it walks like a duck and quacks like a duck, it’s a duck,” asserting that by operating independently, the brand is essentially turning away from its long-standing dealer partners who have been instrumental to its past success.
Impact on OEM & dealer relations
The long-standing industry discussion regarding this decision has strained OEM-dealer relationships. According to Maroone, while the move was not entirely unexpected, it disrupts the traditional equilibrium between manufacturers and franchise partners. He asserted that “This certainly doesn’t help consumers by circumventing dealers.”
Moreover, Maroone foresees a challenging transition for Scout as it shifts from a licensing model to retail sales, which he anticipates will involve complex negotiations, potentially with Volkswagen, and unexpected developments. He emphasized that resolving the situation without resorting to litigation is a priority whenever feasible.
“‘I think dealer associations is good way to fight back.”
Dealers in Colorado, Maroone states, should consider evaluating the following steps: litigation, negotiation, and political advocacy. He then commended dealer associations for their role in unifying industry responses, saying, “Dealers have very strong political capital in most markets, and we’ve got to put it to use.”
Market dynamics
Notably, Colorado’s robust EV market, which accounts for approximately 27% of all EV sales, is currently supported by both federal and state incentives. Although the removal of some incentives in October briefly softened EV demand, Maroone noted that the expected slowdown could be offset by increased interest in hybrids and other alternative powertrains.
“Dealers are resilient. They’ll figure this out and continue to succeed, but the traditional franchise system must be respected.”
Additionally, Maroone shared that Mike Maroone Auto plans to continue pursuing acquisitions in 2026, citing available capital, a skilled management team, and a clear growth strategy.
Ultimately, Maroone expressed concerns that manufacturer-owned brands selling directly to consumers could establish a perilous pattern for franchise dealers, despite his general support for EV adoption. Conversely, he was critical of existing tariffs, arguing that they have generated considerable uncertainty.
