Automotive Dealers Fight Back Against Scout’s Controversial Direct-to-Consumer Sales Model

California New Car Dealers Association Fires Off Cease-and-Desist Letter to Scout Motors

The California New Car Dealers Association (CNCDA) has launched a fresh salvo in its fight against Scout Motors, a new electric vehicle (EV) brand from Volkswagen, over its plans to adopt a direct-sales model for its upcoming Traveler SUV and Terra pickup. In a dramatic escalation of the conflict, CNCDA sent a formal cease-and-desist letter to Scout last Friday, demanding that the company halt taking deposits on both vehicles, citing an amended California law that prohibits automakers from competing directly with their existing dealership franchises.

At the heart of the issue is the exemption that allows Tesla, another EV pioneer, to sell directly to consumers in California. However, while Tesla had no existing franchise agreements that could have been threatened, Scout Motors has a different story to tell. The key factor here is that Scout is an affiliate of Volkswagen, which, under California law, means it is bound by the same rules as any other automaker.

A Case of Direct Sales and Prior Exemptions

In its cease-and-desist letter, CNCDA argues that Scout is essentially a VW Group brand, just like any other, regardless of how it chooses to spin its identity. As such, it is subject to the same rules as everyone else: if you want to sell cars in California, you can’t outrun your dealerships. The outcome is straightforward: Scout must either abandon its direct-sales plan or face the consequences.

Scout’s Response: We’re Watching and Waiting

Scout has been aware of the amendment and even lobbied for language that would carve out room for it to establish its own dealership franchises, separate from other VW Group brands. By choosing to bypass this entirely, CNCDA claims Scout is engaging in misconduct. The rest of the letter is, shall we say, quite colorful; the words "brazenly unlawful" make an appearance.

What’s Next? We’re Waiting to Hear Back from Scout

We’ve reached out to Scout to request a statement on the situation, but it’s likely the lawyers over there have seen this one coming. We’ll update this story if we receive a response.

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