On the Dash:
- Direct-to-consumer Scout EV sales may reduce dealer revenue from vehicle sales, financing, service, and cross-sales.
- Legal disputes over “Authorized Products” could affect dealer access to new EV inventory and future models.
- Dealers should monitor the lawsuit’s outcomes, which may set a precedent for dealer rights and contractual protections.
On March 3, 2026, two Volkswagen dealerships filed a class-action lawsuit alleging that the automaker breached its contracts by selling Scout-brand EVs directly to consumers online.
The suit, filed in the U.S. District Court for the Eastern District of Virginia, names Scout Motors, Inc. and Scout Motor Sales LLC as defendants, alleging that Volkswagen formed these entities to circumvent its legal obligations to dealerships. Plaintiffs Sunrise Imports LLC of Long Island, New York, and Curran Volkswagen Inc. of Stratford, Connecticut, bring the claims on behalf of all U.S. persons and entities operating a Volkswagen dealership under a Dealer Agreement.
According to Hagens Berman, the law firm representing the dealerships, over 150,000 customers have already paid to reserve Scout vehicles through pre-orders on the brand’s website. The lawsuit alleges that by selling directly to consumers, Volkswagen is depriving dealers of revenue from vehicle sales, financing, service, and cross-sales.
Hagens Berman managing partner Steve W. Berman said in a statement, “It appears that VW has violated its own contract with its dealerships, the very businesses that serve its brand, and we intend to uphold the contractual rights of these small businesses.”
The suit cites the Volkswagen Dealer Agreement, which requires the company to sell and deliver “Authorized Products” to dealers and prohibits “discourteous, deceptive, misleading, unprofessional or unethical practices.” The dealerships allege Volkswagen’s claim that Scout is a separate entity is false, noting that Scout was acquired by Volkswagen AG through International Motors in 2021.
Notably, as stated in the lawsuit, Scout CEO Scott Keogh publicly confirmed, “100% Scout Motors is part of the Volkswagen Group… and reports into the Volkswagen Group directly in Germany.”
The dealerships seek damages, including punitive and treble damages, as well as injunctive relief to halt the direct-to-consumer sales.
